Tax expert shows how HMRC's system errors cost people money
HMRCʼs automated tax assessment system makes mistakes in calculating savings allowances causing people to overpay. A recent case highlights how the tax office fails to fix its errors without media pressure
Its common for HMRC to make mistakes in tax calculations but getting them fixed is a real head-ache. Linda MacBrydeʼs case shows how the tax office cant handle basic allowance calculations (which should be simple)
The main issue here is about savings allowance - a £1‚000 tax-free band for savings income. HMRCʼs SA302 assessment system doesnt allocate personal allowances correctly: failing to follow its own rules about giving tax-payers the best possible outcome. The system should put the £12‚570 allowance where it saves most money but it dont work right
Here are the ways to challenge wrong assessments:
- Contact HMRC within 60 days of getting assessment
- Appeal within 30 days if you dont like their answer
- Make over-payment claims up to 4 years back
- Use special rule ESC B41 for HMRC errors
The tax officeʼs computer system - running since 2016-17 - seems to have old bugs that were never fixed properly. HMRC does 3‚500 manual checks yearly; which shows something isnt working right in their set-up
Unfortunately Mrs MacBrydeʼs case was not picked up by this process
Mike Warburton‚ a former tax director points out that when he checked Mrs MacBrydes numbers using full self-assessment the result showed lower tax due. The difference was exactly what she shouldve saved on her savings income at 8.75pc
HMRC finally said sorry to Mrs MacBryde and fixed her bills - but it took media attention to make it happen. The bigger question is how many other people are paying too much tax because of these system errors
