Tax concessions announced by government Three years to pay & claims under £300 written off

09 September 2010

Treasury Minister, David Gauke, has confirmed that in cases of 'genuine hardship' HMRC will allow those who receive tax demands caused by errors in PAYE to spread their repayments over three years. 

Houses of Parliament

Answering questions in Parliament, Mr Gauke gave further details of the PAYE problems that have sparked the unexpected tax demands, and Government plans to mitigate their impact. It was reported earlier this week that 1.4 million people have been found to have paid too little tax over the last two years, and 4.3 million too much. 

Time to pay

The most significant concession is a willingness to allow those faced with an extra tax bill additional time to pay. Normally, underpayments are collected by an adjustment in an individual's tax code for the forthcoming year, which means that the tax they owe will be paid back over 12 months. HMRC had previously said that this would be the case for those who owed up to £2,000. Mr Gauke has now said that in cases of genuine hardship, repayments can be spread over three years.

Small claims written off   

Claims for under £300 will not be pursued, it has been announced. This is an increase from the previous threshold of £50. It applies to 40% of underpayments.   

Loophole questioned

A previously obscure 'loophole', (ESC A19), whereby those who have supplied correct information to HMRC over 12 months ago can challenge demands for additional tax for 2008-9 or previous years, has been widely reported and outlined in detail by the Low Income Tax Reform Group of the Chartered Institute of Tax. Commenting on this in his Parliamentary answer yesterday, Mr Gauke said: 'HMRC will consider writing off underpayments where it can be shown that HMRC was provided with all the information necessary-although I have to tell the House, from historical experience, that that is unlikely to apply to many cases. We do not want to build up people's hopes unrealistically.'

pound coins

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