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One million hit by tax errors

Files of taxes
Date 6 Jul 2007

5% of the population are affected due to 'processing errors'

One million UK taxpayers are paying the wrong amount, according to the latest figures from the National Audit Office. Income tax is processed accurately by Her Majesty's Revenue and Customs in the majority of cases, but errors lead to the wrong amount of tax being paid by around 5% of the population.

Taxpayers with complicated tax affairs, such as people on pensions and those with several jobs and sources of income, are more likely to suffer, which can lead to both underpayments and overpayments of tax, according to the NAO. The average underpayment during 2006-07 was around £250 and the average overpayment around £290, although some errors can lead to unexpected demands for repayment of much larger sums.

Major causes of error are the increased complexity of processing work as people change jobs more frequently and the need to process certain cases manually. In addition, the report revealed that accuracy rates vary significantly across local offices.

Sir John Bourn, Head of the NAO, said: "HMRC has improved its processing of income tax returns but there are still substantial numbers of taxpayers who are affected by processing errors. Vulnerable groups such as pensioners are likely to be disproportionately affected. The recommendations in my report will help the Department build on the work already underway to improve the processing of tax returns."

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