Were self assessments incorrectly calculated by HMRC?
Chris Hogan, 10th February 2016, Business
A story is rumbling around about errors made by HMRC's tax calculation software which mean that many self-assessment returns for the year 2013-14 may have been inaccurate.
It's not the first time. The Daily Telegraph discovered back in October 2014 that HMRC was so concerned about errors that a stop was put on over-payment refunds.
The Revenue eventually admitted publicly that errors made with some large employers could affect five million people. A reconciliation process somehow had incorrect tax and earnings figures so incorrect over or underpayment calculations were made. At the time it was said that the problems would be resolved within six to eight weeks.
Accountancy software problems
This latest story concerns a slightly different problem, one that's more likely to affect people who use accounting software to file their own returns or are customers of accountants who use software to make returns.
It appears that the accountancy software made calculations which the HMRC's own software could not believe were correct, so they were refused. Accountants were instructed to change their figures to match HMRC's figures, which were usually higher, meaning people paid more tax.
Fixed on the quiet?
George Bull, senior tax partner at accountancy firm RSM UK said that in the following year "it became apparent that HMRC had discovered they were wrong and corrected their computation, but had not told us." The same software calculations were now being accepted, rather than rejected.
This story broke at the beginning of January and so far there's no indication that HMRC are going to be proactive about processing refunds. RSM UK are now applying for refunds on behalf of customers they believe have been affected by this.
Errors like this are more worrying as HMRC and the Treasury seem determined to go ahead with a fully digital tax system that will take information from our bank and saving accounts as well as other sources and calculate our tax for us.
Oversight for HMRC required?
George Bull makes the point that it's even more important now for HMRC to be accountable to an independent body.
"If the standard set by HMRC is incorrect," he said, "all tax returns software will be wrong in that respect. This suggests a fundamental gap in the quality control of the publication of online forms by the Ministry of Justice, by HMRC and potentially by other government departments.
"This is a matter which requires attention now as citizens are increasingly required to complete online forms because no other means of 'interaction' with 'government service providers is permitted."
If you think you might have been affected by this problem your accountant will be able to advise as to whether you can apply for a refund.
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