By Steven Swinford: Millions of people face seeing money disappear from their bank accounts without being told after a "sinister" power grab by the taxman, experts have warned.
HM Revenue and Customs wants to delay telling employees about changes in their tax-codes for up to a month, which could see people paying more tax than they owe.
Tax experts say that the delay would mean people only find out when it is too late to correct the mistake and the money has already been deducted from their monthly salary.
Last year HMRC took the wrong amount of tax from 5.5 million workers through the Pay As You Earn system, despite a new £300 million computer system designed to calculate payments more accurately.
An estimated 2 million people paid too much tax last year because of errors in the PAYE system, while 3.5 million paid too little and had to make repayments to HMRC.
The number of errors has risen from 5.2 million in the previous year, despite a new £300 million computer system which is designed to calculate payments more accurately.
Lesley Fidler, a tax director at Baker Tilly, said: "When you are counting the pounds in your pay packet you don't worry that it will work itself in the long term, you are thinking 'have I got enough this month?' This delay does seem to be manipulated, it's a sinister sense of manipulation. People will effectively be lending to the taxman out of their salaries."
The errors arise when someone has multiple sources of income, such as various pension, or because of a change in employment circumstances. In many cases, however, officials simply make mistakes.
At present, both the employee and employer are notified about changes to tax codes as soon as they happen. Under the new regulations employees will have to wait up to 30 days to be notified of the change.
The regulation is currently being consulted on but is likely to be laid before Parliament later this Summer.
It comes after HMRC applied for new powers to allow it to raid the bank accounts of people who have failed to pay their dues.
MPs on the Treasury Select Committee said they were “horrified” by the proposals which HMRC says it needs to recover tax from 17,000 “recalcitrant debtors”.
Lin Homer, chief executive of HMRC, insisted that the powers would only be used in extreme circumstances and would never leave taxpayers short of “enough money to live.”
However, she caused alarm by explaining that HMRC would be able to judge whether a debtor could afford to pay up because they would have access to 12 months of the target’s personal spending habits. The proposals are currently out for consultation until the end of July.
An HMRC spokesman said that the delay is only likely to be used in "limited circumstances" at busy times of the year, such as around the self-assessment deadline.
A spokesman said: "Where this happens, the employer will still be informed immediately of any change and if a customer requests a tax code we will issue one.
“HMRC anticipates savings for the taxpayer of several millions pounds in printing and postage costs, as a result of these changes.
"HMRC is currently consulting on the proposed changes and welcomes comments on the detail. We plan to lay finalised regulations in the autumn."
Source
X art by MK
The number of errors has risen from 5.2 million in the previous year, despite a new £300 million computer system which is designed to calculate payments more accurately.
Lesley Fidler, a tax director at Baker Tilly, said: "When you are counting the pounds in your pay packet you don't worry that it will work itself in the long term, you are thinking 'have I got enough this month?' This delay does seem to be manipulated, it's a sinister sense of manipulation. People will effectively be lending to the taxman out of their salaries."
The errors arise when someone has multiple sources of income, such as various pension, or because of a change in employment circumstances. In many cases, however, officials simply make mistakes. At present, both the employee and employer are notified about changes to tax codes as soon as they happen. Under the new regulations employees will have to wait up to 30 days to be notified of the change.
The regulation is currently being consulted on but is likely to be laid before Parliament later this Summer.
It comes after HMRC applied for new powers to allow it to raid the bank accounts of people who have failed to pay their dues.
MPs on the Treasury Select Committee said they were “horrified” by the proposals which HMRC says it needs to recover tax from 17,000 “recalcitrant debtors”.
Lin Homer, chief executive of HMRC, insisted that the powers would only be used in extreme circumstances and would never leave taxpayers short of “enough money to live.”
However, she caused alarm by explaining that HMRC would be able to judge whether a debtor could afford to pay up because they would have access to 12 months of the target’s personal spending habits. The proposals are currently out for consultation until the end of July.
An HMRC spokesman said that the delay is only likely to be used in "limited circumstances" at busy times of the year, such as around the self-assessment deadline.
A spokesman said: "Where this happens, the employer will still be informed immediately of any change and if a customer requests a tax code we will issue one.
“HMRC anticipates savings for the taxpayer of several millions pounds in printing and postage costs, as a result of these changes.
"HMRC is currently consulting on the proposed changes and welcomes comments on the detail. We plan to lay finalised regulations in the autumn."
Source
X art by MK
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