HMRC System's Mass Mistakes Means 3.5 Million Workers Face Surprise Tax Bill
HMRC System's Mass Mistakes Means 3.5 Million Workers Face Surprise Tax BillReuters

Over 3.5 million workers face a surprise tax bill of around £300 over the next year after an inaccuracy in the HMRC's system meant millions of employees paid too little tax.

Those who owe HMRC extra tax will pay it back through the Pay as You Earn (PAYE) system next year.

Overall, around 5.5 million paid the wrong amount of tax, meaning around 2 million paid too much and will be sent a rebate.

The major errors occurred over the 2013-2014 tax year and despite the taxman stumping up around £270m (€338m, $460m) for a new programme, Real Time Information (RTI), after a pledge to improve the accuracy of the tax system.

However, the overall amount of employees paying the wrong tax amounts is higher for the 2013-2014 year than the previous year.

HMRC said in a media statement that "the effects of RTI had not been reflected yet and it would eventually lead to a reduction in the number of corrections".

Using the RTI system has come under fire from employers over the last year as they have to report wage payments to HMRC on a weekly or monthly basis.

In May this year, the public vexed concerns over new proposals that the taxman could directly seize money from bank accounts, if the HMRC deemed the person to have not paid enough tax.

Under the proposed laws, the HMRC revealed in a consultation document that the process of "direct recovery" would allow it take money straight out of joint accounts if the holder had failed to act on four formal warnings requiring payment.

It said that if the new law came into force, it would immediately target 17,000 accounts.

People who owe tax authorities £1,000 or more could see that money seized directly from their bank accounts. However, this could only happen provided there was £5,000 left in their accounts afterwards.

The taxman has already admitted to charging more than five million people wrongly through the PAYE system last year due to them being allocated the wrong tax code.

In 2007, the HMRC also lost physical discs that contained personal data and bank details of 25 million families claiming child benefit.