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Last Updated: Saturday, 16 December 2006, 13:02 GMT
Major IT error at the Revenue
By Paul Lewis
BBC Radio 4's Money Box

HMRC building in London
The Revenue is working through the large employers affected
Hundreds of thousands of people have been wrongly told they have a tax records gap that may cut their pension.

The error was caused by a glitch in the Revenue and Customs' tax system used by the UK's largest employers.

A Revenue spokesman said it did not know how many of the 4.7m notices suggesting people pay 371 had been sent out in error.

Payroll expert Karen Thomson says the total affected could be 700,000, including many teachers and nurses.

Speaking to BBC Radio 4's Money Box programme she said: "On average the Revenue produces four million of these notices a year.

"They have confirmed to us that this year 4.7m will go out to the end of January, so the difference, 700,000 notices, could be incorrect."

The Revenue challenged this methodology because "there are so many variables" but would not offer an alternative nor confirm or deny that figure.

But Money Box has evidence that the problem is widespread.

The programme has been contacted by teachers, doctors, other NHS workers, librarians, people who work at Gatwick, for EDF Energy, for Boots the chemist - even someone who works for HM Revenue & Customs.

And if one person in the company gets the notice, the rest are likely to as well.

Angry workers

Susan Millington, payroll manager at Tameside Borough Council in Manchester which employs 11,000 people, said: "We have had well over a thousand calls. People are very cross.

"We were told by the Revenue they were aware of the error but they can't do anything to stop it. I just couldn't believe it."

I am really shocked, amazed, it's really worrying
Keith Parry, council worker

Keith Parry works for Tameside. He said all his colleagues had received the letter which suggests they pay 371 to "make up the shortfall and protect your entitlement to basic State Pension".

He rang the helpline and spoke to a Revenue official who "immediately said that it was entirely caused by the Revenue, some sort of computer error and said some two and half million people were involved".

"I am really shocked, amazed, it's really worrying," he said.

A Revenue spokesman denied that figure was correct and said it was working through the large employers affected and will eventually be sending letters to all those who have received the notice in error.

The problem began after the Revenue told all employers with more than 250 staff to file their 2004/05 pay returns electronically.

The Revenue's computers could not cope, dropped information and missed National Insurance contributions.

Another computer then sent out letters informing individuals they had a gap.

Karen Thomson says anyone who has been in work for the whole of 2004/05 should not pay until the position has been clarified.

If there is a shortfall, they have until 5 April 2011 to pay the extra contributions. The letters have a helpline number for those who are concerned.

BBC Radio 4's Money Box will be broadcast on Saturday, 16 December at 1204 GMT and Sunday, 17 December at 2102 GMT.

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