Union predicted tax ‘chaos’ following Customs and Revenue merger

The HM Revenue & Customs (HMRC) blunders that led to nearly six million people across the UK paying the wrong amount of tax can be directly linked to the merger of Revenue and Customs in 2005 and subsequent job cuts, the Public and Commercial Services (PCS) union claimed today.

HMRC this week began sending the first of 5.7 million letters to people telling them of a miscalculation in their payments. The mistakes, which all affect the PAYE tax system, were identified by a new computer system introduced by HMRC last year. About 1.4 people million will be told they have not paid enough tax and will receive a bill for the difference.

The PCS said that it predicted problems of this nature would occur when discussing the merger and related job losses at a Treasury select committee in 2007.

The department has cut 30,000 jobs since HMRC was formed in 2005, resulting in one million pieces of post going unopened and 17 million “open cases” – accounts where there are outstanding queries – not being dealt with, according to the union. More than 40 million calls, almost half of all those to HMRC enquiry centres, went unanswered last year because the department does not have enough staff, it added.

Rather than making more cuts, PCS national officer Pete Lockhart called on HMRC to invest in jobs to collect tax that is owed.

“It is time to invest in HMRC people and create jobs to collect the £25 billion a year lost through tax avoidance, £28 billion uncollected because of a lack of resources in HMRC, and £70 billion evaded by some very wealthy and powerful individuals and organisations,” he said.

The tax blunders do not directly affect employers – it is a matter for staff to take up directly with HMRC – but they have been urged to help employees solve or explore tax-related problems, such as by offering advice and support via the intranet or an open forum.

Simon Parsons, director of payments, benefits and compliance strategies at HR services firm Ceridian, said: “It’s always best to direct employees to their local tax office if they have concerns but it might be worth sending them a copy of their benefits statement so that they know what benefits they have received and offer information about who might be affected.”

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