HMRC are currently tackling tax avoidance by a variety of measures. They are also working their way through the 18 million cases where the incorrect amount of tax has been paid – some under and some over. It is estimated that overall taxpayers have overpaid more than £3bn to HMRC. It is expected that umbrella contractors, limited company contractors and freelancers are amongst those who will be due money back.
National Audit Office chief, Amyas Morse, commented that many of these cases date as far back as pre-2007 and while it is a challenging task for HMRC to sort through them all, they have not yet made appropriate progress with this task.
HMRC has tried to put systems in place to ensure that money is not paid out erroneously. For example, in tax year 2009-2010 it is estimated that between £1.95bn and £2.27bn of the £27.3bn paid out in tax credits was paid either by error or through fraudulent claims. Their new strategies have prevented a further £569m from being paid out erroneously.
However, despite making inroads to deal with errors in paying money out, HMRC has yet to employ appropriate strategies to deal with recovery. They prioritise recovery of tax debts of a higher value but this year alone tax credits debts have risen to £4.5bn.
An HMRC spokesperson has confirmed that a new computer system currently being installed will calculate tax deductions in a more accurate manner. He also stated that most tax refunds are processed and paid back in a matter of weeks but sometimes individual cases are held up because of required security checks.