HM Revenue and Customs is making errors in calculating
at least a quarter of taxpayers' PAYE codes, leading employers to
deduct the wrong amount of tax, according to the House of Commons
Public Accounts Committee.
The Revenue also made errors in processing 500,000 returns,
leading to £65m of undercharges of taxpayers and £30m of
overcharges, according to the report, which highlighted many of the
issues raised in Computer Weekly's Making the Tax System Work
campaign.
The report outlined the department's struggle to cope with the
1.6 million self-assessment forms filed online in 2004-05, although
last month's online tax filing deadline did not suffer the service
outages of previous years.
Public Accounts Committee chairman Edward Leigh said, "HMRC is
responsible for errors in processing returns in 5% of cases. And
some 30,000 taxpayers received incorrect penalty notices even
though they had actually filed on time. The department must improve
its performance in this area."
He urged the department to introduce a system that can track
errors in processing, coding, the imposition of penalties and their
enforcement.
The report also called for improvements in telephone helplines,
online forms and improved training for call centre staff and to
extend the hours of service at peak periods throughout the
year.
HMRC said it was developing better IT, which it expected to
remove a third of its coding errors.
Revenue must learn to say no