Nearly six million UK taxpayers, including umbrella company contractors, are due for a rude awakening, thanks to an error in the PAYE system.
Current estimates for the newly recalculated taxes predict that some taxpayers will have to cough up £5,000 over what they’ve previously paid, while there may be as many as 1.4 million Britons that are going to be held accountable for an additional £1,400 to settle up with the taxman.
The PAYE’s new computer system is to blame, according to news reports throughout the weekend, since it identified a total of £2 billion in underpayments.
It’s not all bad news, however, especially not to the approximately four million taxpayers who are now eligible for tax rebates due to initially over paying. HMRC will be sending the first round of letters this week; expectations are that of the roughly 45,000 notices being sent out, only approximately one third of them will be to request additional funds for taxes owed.
A spokesman for HMRC recently commented on the error, stating that due to the uncertain nature of taxpayer’s financial situations and how they can fluctuate throughout the year, a small number of people will always end up either over paying or simply not paying enough. The spokesman concluded by stressing that out of the 40 million taxpayers who do utilise the PAYE system to make deductions, the sizable majority of them are taxed properly.
Anita Montieth, a spokesperson for the Institute of Chartered Accountants in England and Wales, declared that taxpayers could get out of the new tax assessments if HMRC had done any tax code calculations manually, saying that if HMRC did had the proper information in order to calculate the correct tax deductions but neglected to use that information properly, taxpayers can petition them for the privilege of not being responsible for repayment.
Ms Montieth was quick to say that that would only be applicable if there was some error on HMRC’s part in regards to tax code calculation.
© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: Head in Hands by Alex E. Proimos
