Tax Blunder: A Million Face £1,500 Bill Shock
3:03pm UK, Saturday September 04, 2010
More than one million people are facing a £1,500 bill for not paying enough tax thanks to a blunder at HM Revenue and Customs.
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Over the next few months, almost six million people will be told they have paid the wrong amount of income tax.
It is thought a problem with the Pay As You Earn (PAYE) computer system means 1.4 million workers have underpaid.
They will have to fork out an additional payment of around £1,500 each, which will be taken out of their pay packets next year.
With an average of £1,428 being demanded, those affected by underpayments could be more than £100 a month worse off while the cash is clawed back.
But for almost four million people it will be good news when they find out they are due a refund.
With a total of £1.8bn to be handed out, each could receive an average rebate of £418.
The first 45,000 letters from HM Revenue and Customs are expected to arrive on Tuesday with the rest due before Christmas.
Some individuals may find they have both underpaid and overpaid, with the payments canceling each other out.
In some cases, HM Revenue & Customs state they will think about writing off demands where taxpayers can demonstrate they provided all the information necessary to compute their tax correctly.
The problems arise because at the end of each year, HMRC checks that the amounts deducted in tax and national insurance by employers using the PAYE system mach up with the information held on their records.
In the past, this was done manually on a case-by-case basis, but a new computer system has now been introduced to automate the checks.
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