A problem with the Inland Revenue's computer system is suspected to be the cause of incorrect coding for company car drivers that could lead to over £2.25bn in uncollected taxes.

Accountants discovered a problem with new tax codes for company car drivers that take carbon dioxide emissions into account.

City-based accounting firm Moore Stephens told vnunet.com that it first noticed a problem when the Revenue returned incorrect PAYE codes for its clients to apply to employees with cars.

"When the Revenue has applied that emissions data to the system that applies the PAYE coding it seems to be understating the tax," said Stephen Durman, an associate in the employer support group at Moore Stephens.

According to Durman the average understatement is £750 which, if applied to the UK's three million company car drivers, would lead to a tax shortfall of £2.25bn.

The Revenue admitted that it did not know the cause of the problem but said it only affected a small number of cases and would be fixed within a month.

"We are still looking into it but it is not a widespread problem. It is only a small minority of cases and we will get a correct code out within a month," said a spokeswoman.

She added that other cases of incorrect codes being sent out were because employers had not submitted emissions data for their car fleets and an estimate had been made. A notice has been sent with these estimates asking companies to check the data.

vnunet

-- Anonymous, January 22, 2002

Answers

UK: Inland Revenue screws up on Y2K, taxpayers hurt

GICC Archives

-- Anonymous, January 22, 2002

Taxman set to pocket £15m in overpayments

The problem stems from 1997 when the Inland Revenue switched to a new computer system.

The records of 1.04 million taxpayers were left incomplete during the changeover, including 150,000 people who were owed refunds because they had paid too much tax.

Officials from the Inland Revenue sent out letters alerting people to the problem, but only a fraction of taxpayers replied.

Now the taxman could pocket £15.1 million which was wrongly charged to workers for the tax year 1997/98 unless more people come forward.

An Inland Revenue spokesman says: "If people who suspect they are owed money come forward we will reopen their files. However, if that does not happen the £15.1 million will become part of our ongoing finances.

"We have done everything reasonable to address the situation and the computer problem has now been successfully addressed."

The computer mishap drew criticism from the government's spending watchdog, the National Audit Office (NAO), which warned the impact on individual taxpayers could be "significant".

The problem was triggered when data was lost as the Revenue transferred information from its National Insurance computer system Nirs2 run by Accenture to its Computerised Operation of PAYE (COP) system.

Ananova

-- Anonymous, February 15, 2002

UK Inland Revenue wrongly issues tax fines

TB2000 Archives

-- Anonymous, February 16, 2002

Question over Brown's tax bonanza

by Ross Davies, Evening Standard

IF YOU were fined £100 for missing the 1 February deadline for returning self-assessment tax forms, it will be of cold comfort to learn you are not alone - the Inland Revenue reckons it will gain about £80m from some 800,000 people in the same position.

However, tax advisers say the Revenue may have got its sums wrong. The number of people who missed the cut-off date is boosted, it is claimed, by thousands of returns sent out in error to people who do not earn enough to pay income tax or who may even be dead.

'I doubt the integrity of Inland Revenue figures for self-assessment returns, because they have severe computer and office rationalisation problems, as well as a go-slow by staff,' said Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants:

'The combination of these problems means that the Revenue unnecessarily sends out thousands of self-assessment returns for completion by people who do not qualify and they simply bin the forms. Other taxpayers are now dead, but the Revenue has yet to catch up.'

Last year, the Inland Revenue said 850,000 self-assessment forms were overdue, from the nine million sent out, supposedly netting Chancellor Gordon Brown £85m to set against the lost revenue. Current Inland Revenue estimates put the number of late returns at a shade above last year, but it is this similarity that is leading tax advisers to doubt the arithmetic.

In the run-up to the 1 February cut-off, the Revenue spent £5.5m on adverts in which taxpayers were urged to return their forms and pay their tax on time by Mrs Doyle, the nagging housekeeper played by Pauline McLynn in the Channel 4 TV series Father Ted. At first the Revenue thought it would have compiled the figures for missing returns by 8 February, but missed the deadline.

'Although we are still auditing the figures it is clear the slight downward trend of recent years has been reversed. We apologise for the delay in providing final figures,' the Revenue said on Friday.

The original, 31 January cut-off for tax returns was extended by a day after problems at three major tax centres, including the Liverpool Riverside District, which handles those from people living and working in the South East.

The Inland Revenue has hired 2,000 extra 'revenue receivable managers' with orders to target those whose self-assessment returns are late. Failure to return a single phone call may be enough to launch an investigation into your affairs, and debt collectors are under orders to find against the taxpayer in 76% of cases.

This is London

-- Anonymous, February 18, 2002

Inland Revenue to pocket £15m overpaid tax

THE Inland Revenue is likely to pocket more than £15m in overpaid tax because of a major computer error.

The problem stems from 1997 when the Revenue switched to a new computer system.

This left the records of 1.04 million taxpayers incomplete during the changeover.

Those affected by the blunder include more than 150,000 people who were owed refunds because they had previously overpaid tax.

The Revenue sent out letters alerting people to the problem, but only a fraction of taxpayers replied.

Now the taxman stands to pocket £15.1m which was wrongly charged to workers for the tax year 1997-98 unless more people come forward.

A Revenue spokesman said: "If people who suspect they are owed money come forward we will reopen their files. However, if that does not happen the £15.1m will become part of our ongoing finances.

"We have done everything reasonable to address the situation and the computer problem has now been successfully addressed.''

The computer mishap drew criticism from the government's spending watchdog, the National Audit Office (NAO), which warned the impact on individual taxpayers could be ``significant''.

The problem was triggered when data was lost as the Revenue transferred information from its National Insur- ance computer system Nirs2 run by Accenture to its Computer- ised Operation of PAYE (COP) system.

Only 161,000 taxpayers have so far responded to letters sent out by the Inland Revenue to fill in the missing information, including fewer than 15,000 who were owed money.

This has resulted in repayments of only £1.5m, leaving the £15.1m outstanding.

TAX specialists IRPC Taxation Services warned today that thousands of people could be in for a shock enquiry from the taxman - despite getting their self-assessment returns in on time by the January 31 deadline.

"It's a tough regime, and even people with nothing to hide may even be caught by a random enquiry", says IRPC Tax Director Simon Howes.

Manchester Online

-- Anonymous, February 27, 2002

Revenue blunder causes bill chaos for drivers
by mark atherton

THE Inland Revenue still has not sorted out a coding error that could result in up to three million company car drivers paying too little tax next year, claims Moore Stephens, a firm of chartered accountants. The firm pointed out the mistake in January and says it has not been corrected in most cases. The Revenue admitted that most codings “probably need to be changed”, and that, where the estimate is too low, “company car drivers will face an unexpected bill later on”. Stephen Durman, employee benefits specialist at Moore Stephens, forecasts that if the error is not corrected, company car drivers could end up paying an average of £750 too little, which would leave the Revenue with a massive £2.5 billion shortfall. Mr Durman spotted the mistake on receiving his new company car tax code indicating his liability under the Government’s new green regime, which is being introduced next month and taxes cars according to their carbon dioxide (CO2) emissions, instead of mileage. Mr Durman says that in his case — and in hundreds of others that he has seen — the codings indicated tax percentage figures of below 15 per cent, when that figure is the lowest standard company car tax band. The Revenue admitted in January that it had sent out incorrect codings. It said that in most cases these were estimates, because companies had not provided the necessary information about their vehicles. It also admitted: “In other cases, where the correct information had been provided to us by employers, the recently issued coding notices have not been calculated as they should have been. This was because of a problem with the transfer of information between our computer systems. We apologise for this. “Revised coding notices, using the information already given to us, will start going out to company car drivers within the next few weeks, and everyone concerned should have received one by the end of March.” A Revenue spokesman says that it expects to be sending out 280,000 of these revised notices. But Mr Durman says that this has not happened so far. “This has not been our experience, except in particular cases where people have taken direct action to get their coding corrected,” he explains. “Where people have done nothing except wait for the matter to be sorted out, they have received nothing.” In his own case he received a letter dated February 25 from the Revenue, asking him to provide details about his company car, even though his firm had supplied this month’s previously. He says: “In most cases we estimate that the Inland Revenue has understated the tax liability by about £1,900, which for a 40 per cent taxpayer, works out at around £750. While many people like the idea of a smaller bill, they will eventually be asked for the whole amount.” The Revenue spokesman says: “People can find out more information about company car tax from our website and can also contact their local tax office.” The telephone number and address of the relevant office can be found on coding notices. The Times -- Anonymous, March 16, 2002 Moderation questions? read the FAQ