Is taxman trying to dodge appeals?

Closed tax officeAFP/Getty Images

As 1.2 million people are set to get yet more demands to pay £600 in undercharged tax, a report claims that HM Revenue & Customs is trying to cover its mistakes and hide vital data from taxpayers who appeal a tax demand.

So what's going on?

Internal memo leaked

The Daily Mail is claiming to have seen an internal memo which reveals the decision-making process that the taxman goes through when someone appeals for leniency in an effort to avoid paying horrible and unexpected tax bills.

It was accidentally sent to one taxpayer after he had appealed for a leniency on a demand for just over £2,000. He appealed under a rule that means the bill can be written off if the taxpayer can show they did everything within their power to ensure they were paying the right tax – including letting the tax office know about all their income.

The appeal was rejected on the basis that the taxpayer had queried the bill earlier, so must have known something was wrong. However, it also included an internal note never meant for the eyes of the outside world.

Hiding mistakes

In it, a technical adviser said that HMRC had made mistakes. Without these errors it could have saved the taxpayer from any unexpected bill at all, because HMRC failed to act on information the taxpayer had given them on two separate occasions, and hadn't given him a tax assessment on time.

However, it went on to say that the taxpayer should have pursued them over the mistakes, so was at fault. It advised HMRC to write and apologise for the poor quality of service but to reject the appeal. The taxman then did this, but never acknowledged that HMRC had made the mistakes in the first place.

Appeals

The experts say that this could open the door for a number of appeals against appeals, as clearly concealing mistakes revealed during investigations is not showing the level of transparency the taxman requires from taxpayers, or that it should be held to itself. If these cover-ups can be proven, the appeals will have to be revisited.

A spokesman told the newspaper: "HMRC is committed to applying the tax rules reasonably and fairly across the board. However, we are acutely aware we make mistakes and when we do we apologise and sort things out quickly. We have improved the quality of tax codes issued to employers and pension providers this year and will reduce the number of taxpayers facing under and over-payments in future years."

However, if the experts are right, it has a long way to go before the ongoing debacle over past mistakes comes to an end. And before this particular issue is laid to rest there is still a small glimmer of hope for those who have found themselves in serious financial difficulties as a result of mistakes by the taxman.
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