It has been reported that 1.4million taxpayers have underpaid tax through no fault of their own.
In fact, it is HMRC who are to blame as their computer systems have proved to be majorly flawed.
To add to the backlash the Government department is already facing, BBC Radio 4’s Today programme aired an interview with an anonymous tax inspector who exposed details of dwindling morale and poor operational standards within the department.
The anonymous inspector described HMRC as ‘at melting point’, something the country, as a whole, really do not want to hear.
They are, after all, responsible for collecting taxes for the whole of the UK and should not be based on flaws and mistakes.
The inspector, who has been an employee of the taxman for the past 10 years, said:-
“HMRC hasn’t been fit for purpose for a very long time. It is now at melting point. We don’t have the staff we need, we don’t have the resources we need and the computer systems we use are atrocious.”
The interview with reporter Andrew Hosken was a result of the media frenzy surrounding PAYE errors and the subsequent posting of 45,000 letters to taxpayers informing them of their obligation to pay up an average of £1,500 in underpaid tax.
The mistakes, due to the new NPS computer system, was condemned by the whistle-blower who said:-
“We’re on the fourth release of the software and it’s still not working properly. Because we don’t have staff to check individual cases, all of these mistakes are happening and all of this post is going to our customers, the taxpayers.”
The flaws in the system have been blamed on the fact that the HMRC software was not written by those with experience in tax, or even any idea at all about the complicated tax system.
One major defect that has come to light is that the system uses an employer number as a taxpayer’s initial identifier rather than a National Insurance Number.
Staff shortages have also been blamed as “the country doesn’t have the money to run because we’re not resourced properly enough to collect those taxes.”
Debt collection is one area where the staff shortages are thought to be causing a massive problem as “when we see a problem elsewhere there’s nobody to follow it up”.
Although HMRC have openly admitted there is approximately £30bn – £40bn of uncollected tax, the anonymous whistle-blower claimed that Richard Murphy’s Tax Justice report implies that the actual figure could be 3-4 times higher.
When the issue of unanswered letters and calls was touched upon in the interview, the inspector said that almost 1 million unanswered letters are passed between tax offices across the country.
“When I first started, we would get hauled across the coals if a latter was still unanswered after 7 days; now we’re looking at three months.”
Due to the many problems HMRC are facing and are causing, the BBC has commissioned a programme to be produced showing the effects on individual taxpayers, not customers we might add!
The programme is due to look at how and why the errors in tax codes occurred, meet some of those affected and try to discover groups of taxpayers who may be in for a surprise when correct tax codes are finally administered and demands for underpayments are sent out.
All in all, it is really not good news for HMRC and as a result, for the country as a whole.
Serious questions need to be asked about why such major problems are occurring and what is going to be done about it before more taxpayers suffer as a result.