Despite various blunders by HMRC last year that affected umbrella company contractors, the department still spent nearly £800,000 more on bonus payments to staff than it paid out the previous year.
In the current tax year, HMRC has sent out incorrect coding notices to millions of people, including 450,000 pensioners and ‘lost’ £1.3 billion worth of National Insurance contributions.
In the latest HMRC debacle, the Revenue has been unable to match the NI contributions made to the correct individual’s accounts. The money, which is sitting in a suspense account, has been accumulating for the last five years and the problem is thought to affect more than 9 million people. In order to qualify for a full state pension, people have to pay NICs for a minimum of 30 years and there are fears that processing problems could result in some people receiving less than their proper entitlement.
Ian Liddell-Grainger, the chairman of the All Party Parliamentary Taxation Group, said this demonstrated why HMRC must switch to a real time reporting system for PAYE and NICs. Although the Revenue upgraded its system last year, the new system just aligns people’s tax an NI in one place.
HMRC denies that anybody will lose out over the latest blunder and is quick to point out that it sends letters to people when it discovers a gap in contributions. Most of these problems were due to employer’s mistakes in filling out paperwork, a Revenue spokesman added.
The Tory MP for Witham, Priti Patel, said taxpayers will be horrified that the government is spending so much on bonuses for civil servants at a time when there is huge pressure on the public purse.
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