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Posted by: John Brace | 7th April 2011

Her Majesty’s Revenue and Customs – Tax, NI, overpayment and underpayments

Every year I deal with Her Majesty’s Revenue and Customs I realise that half the frustration is caused by internal problems within HMR&C. The excuse given usually is that different departments can’t talk or share information with each other.

Getting money out of HMR&C is like getting blood out of the proverbial stone and can take years. Currently they state regarding the money they owe me “Your repayment request will be processed as soon as possible. ” . Sadly that’s been the way it’s been for the last few tax years.

In 2004 I was owed over £1000! It took a few years before they paid it back (along with a number of denials in the meantime that I should have it). It’s probably far quicker to take them to court!

I really don’t understand why they seem to take bureaucracy to the nth degree and not be able to show some common sense. I do remember Wirral Council owing me some small amount of Council Tax one year, about £5. They refused to pay it back; their excuse was I couldn’t have it back now they’d ended their financial year. I don’t mind too much with such amounts. I did however question the sense in Wirral Council one year sending me about a dozen different council tax demands; it must’ve cost them a bit in postage and printing! I suppose however I shouldn’t moan and most people who are self-employed have gripes with HMR&C. No system is perfect.

For people who are employed (or even self-employed and employed) it can be even worse. For 2009-2010 £1.8 billion was overpaid by 4.3 million people (an average of £418/year each). For small amounts most people can’t be bothered dealing with forms, bureaucracy and government systems seemingly designed to frustrate, confuse and bamboozle in equal measures.

My grandmother used to pay an accountant each year about £80-£100 to claim back about £400-£500 worth of tax overpaid. People on low incomes and minimum wage jobs can’t afford the fees that professionals charge and ultimately end up being hit in the pocket because of a system that is complex, hard to understand and confusing.

It is the system of underpayment of tax and overpayment of tax credits that is more worrying. Both seem designed to deter low-paid people from working. I hope with the new government’s plans for Universal Credit that:-

a) money will be saved by making the system clearer, simpler and easier to understand
b) people will finally get the message that working pays rather than being stuck in the benefits trap created by Labour.


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