Revenue collect wrong tax from 600,000 pensioners
Today, not long after thousands of pensioners with retirement annuities received incorrect PAYE codes, it is revealed that some 600,000 pensioners have had wrong amounts of tax collected from their pensions for many years.
Due to incorrect advice given by HMRC to pension payers (mainly insurance companies) PAYE has not been operated when it should have, in some cases back to 1983. This is revealed in the HMRC Standard Report.
Some 420,000 pensioners will have underpaid tax and another 180,000 will have overpaid.
HMRC have indicated that they will not attempt to collect the underpaid tax arising before April 2007. This does not go far enough. It will take HMRC many months to find out who the people affected are and what they actually owe for the current tax year, if anything.
We urge HMRC not to attempt to collect any underpayment for the current tax year, 2007/08.
For those who have paid too much tax, we expect HMRC to get on with the task of repaying them immediately. They suggest that they will only repay for the statutory period of 6 years. We believe they should reimburse overpaid tax for all years where details are available.
New Treasury Ministers should take a little time to read our recently published report Pensioners on low incomes: The case for tax reform which shows that this sort of event is not unknown in the world of pensioners’ taxation.
Contact: Robin Williamson (Contact tel: 0844 579 6700 , Fax: 0844 579 6701)