Thu, 7 Oct 2010

Belated 'sorry' as HMRC mistakes hit 10 million

Dave Hartnett, HMRC permanent secretary, responded to the news that 10 million people have paid incorrect levels of tax by initially refusing to apologise for the errors. Speaking to Radio 4, he said: ‘I’m not sure I see a need to apologise. I’ve read the papers, listened to the media and heard stories of HMRC blunders and IT failure – none are true.’

Later the following week, on giving evidence to the Treasury Select Committee, Hartnett said he regretted his ‘insensitivity’ in not recognising immediately that people affected deserved an apology. ‘I know how to apologise. I’ve had to do it before,’ he said. ‘I did not do it then, and I’m sorry for that.’

He said he was ‘specifically apologising for the situation in which people find themselves’. I think we could have done better in helping taxpayers prepare for this.’

At the Treasury Select Committee hearing, Dame Lesley Strathie, chief executive of HMRC, insisted the HMRC was ‘fit for purpose’, saying: ‘When something is portrayed in the media as a mistake [I understand] that people lose confidence in our workforce.’

She added: ‘I want to put very clearly on the record that these are not mistakes by our workforce.’

She emphasised that HMRC was not issuing ‘demands for payment’, but rather ‘assessments of the tax that has been paid’.

Dame Strathie also made clear that ministers had insisted on a system for exempting those who owed more than £2,000 from being charged interest. Only those who fail to engage with the Revenue over repaying their outstanding tax within three months and seven days of getting a demand could still be charged interest.

Following news of mistakes, reports have focused on doubts that HMRC will be able to recoup the £2bn from people who have paid too much tax, after it emerged that HMRC has written off more than £40bn in uncollected taxes over the past five years.

News of tax errors comes as the HMRC consultation on changes to the PAYE system closes – changes that could see the tax being centrally calculated and deducted.