Why YOU could owe the taxman: HMRC seeks cash after undercharging 3.5 million people

According to reports, HMRC got tax wrong for 5.5 million people. While 3.5 million were charged too little, two million are thought to have overpaid.

17:36 20 June 2014

Due to the mistakes of HM Revenue and Customs (HMRC), 3.5 million people were charged too little through the pay as you earn system (PAYE) in 2013-14, as reported by the Daily Telegraph. 

 

While 3.5 million will have to pay more taxes, a further two million taxpayers were thought to have overpaid and will need to claim the money back from the government. 

 

According to the newspaper, tax officials estimated the average error was around £300. 

 

The error was blamed on HMRC’s new Real Time Information (RTI) programme that allows employers to report wage changes on a weekly or monthly basis to make tax payments more accurate. However, the system, according to accountants, has not been working as promised. 

 

David Heaton of Baker Tilly told the Telegraph: "RTI was supposed to make PAYE more accurate, not less. So why are there more [errors] this year, with RTI in full flow, than last year, when RTI was only a pilot? The number of PAYE differences has risen, not fallen. Something in RTI is not working."