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HM Revenue PAYE errors affect 15 million taxpayers

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The initial HM Revenue press release on the extent of the PAYE errors may have significantly underestimated the number of taxpayers impacted, say the Guardian.

Last Friday, HMRC said around 4.3 million people paid too much tax and are due refunds of about £420 each on average; while 1.4 million underpaid and will be asked to pay an additional £1,428 each on average.

HM Revenue's 2009-10 report and accounts, however, show 18.2 million unreconciled cases dating back to the 2004-05 tax year where taxpayers "may not be aware that they have overpaid tax and are due a refund or ... that they are liable to make further payments."

Angela Beech, of chartered accountants Blick Rothenberg, said: "It beggars belief as to how matters have been allowed to get out of control to this extent.

"The fact that it will take at least four years to clear the backlog means that no one can rest easy thinking that their tax position is correct. About half of the population could be affected. It's an absolute debacle."

Some tax experts are calling on the Revenue to write off debts for tax owed on the years preceding 2008-09.

Indeed, if you give the Revenue all the relevant information to work out your correct tax code, but it fails to use it within 12 months of the end of the tax year in which it received that information, you're entitled to ask for the tax to be waived through an "extra statutory concession" or ESC A19.

The Low Incomes Tax Reform Group has pointed out that individuals cannot normally use ESC A19 to ask for tax owing for 2009/10 to be written off, but a group spokesman said: "If HMRC have persistently got something wrong year after year, we would expect them to write the tax off for all years up to and including 2009-10."

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