We have commented upon the switch over to PAYE in two previous articles in March and November 2006. For years we have campaigned, along with Age Concern and Help the Aged, for deduction of tax at the basic rate of 22% from retirement annuities to stop, as too many paid tax at the starting rate of 10%, or not at all. Collecting the right amount of tax from each pensioner through PAYE seemed the obvious and proper solution.

We have also said that HMRC delays in writing to those pensioners who had been overpaid had deprived those pensioners of repayments of tax due to them for the past, and we advocated compensation. This plea fell on stony ground.

We now repeat this call in the light of further poor treatment by HMRC and suggest that formal complaints are made and cash compensation requested.

Ruth Kelly MP, the Government Minister at the time in 2004, gave an undertaking to look sympathetically at all issues arising from the transition and to resolve matters “as quickly as possible”. Almost three years on we now have:

• Helplines which have been in meltdown in the most critical month of the year for a pensioner who is owed a repayment (31 January 2007 was the final date for reclaiming tax for 2001/02)
• Many pensioners awaiting a response to letters
• A lack of reaction to forms which were returned to HMRC weeks ago
• Misleading information on the HMRC website if you search on “retirement annuities”

Not only do we have these problems for the past we have currently a range of new issues:

• Non-taxpaying pensioners are receiving complex code numbers rather than a simple NT (no tax) coding, which are very difficult for someone who hasn’t been within the tax net for many years to check or to understand even if they result in no tax being deducted
• There seems to be a lack of liaison between the tax office dealing with retirement annuities (Leicester & Northants) and other tax offices holding taxpayer records
• There are many annuitants who have still not been alerted to the change, either by HMRC or their pension payers
• HMRC seem to be taking a view if they do not have enough information they will overtax people in the short term and get them to claim it back.

This is a far cry from the promises of Ruth Kelly, back in 2004. A subsequent lack of urgency, lack of investment and a lack of publicity has brought us to where we are now.

It is not a good position for many of the lowest income pensioners. We are pressing HMRC to avert some of the worst effects on the most vulnerable by:

• Ensuring that if tax was not being paid before, then tax should not be deducted now
• Staffing helplines adequately to deal properly with those customers who are baffled by what they have received
• Accepting claims for repayment for 2000/2001 and earlier years, even though the deadline has theoretically passed

Whatever happens, pensioners who are overtaxed or refused repayments should consider complaining and seeking compensation. The way to do this is explained in HMRC’s leaflet COP1.

The HMRC Helpline is 0845 366 7868.