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Last Updated: Monday, 10 March 2008, 11:19 GMT
Man made bankrupt 'by accident'
Matt Matharu
Matt Matharu was officially made bankrupt in the High Court
A former taxi driver was accidentally made bankrupt by the Inland Revenue even though he only owed them 88p.

Matt Matharu, of Kent, was made bankrupt in the High Court last August only to be told later it was a mistake.

The bankruptcy was overturned, but the Inland Revenue still wants 45 interest on the 88p and 2,000 in costs, an ITV investigation claimed.

HM Revenue and Customs (HMRC) apologised, but said he should have completed a self-assessment return.

An HMRC statement said: "Mr Matharu should have completed a self-assessment return, however we did not explain to him why it was necessary to do this.

"We apologise for this and also not identifying that he had paid tax at source under his PAYE record."

Moonlighting claims

Mr Matharu used to be a taxi driver, but changed careers to become a graphic designer in 2000.

After his career change, tax was deducted automatically from his salary, and he told the Inland Revenue he was no longer self-employed.

But HMRC sent him a tax bill for 12,000, believing he was moonlighting as a cab driver, and tax officers refused to believe he had already paid his taxes, which led to the bankruptcy action in the High Court.

They see people as being guilty until proved innocent
Matthew Elliot
Taxpayers Alliance

A month later, he was informed MHRC had made an error and the real sum owed was 88p.

Matthew Elliot, chief executive of the Taxpayers Alliance, said: "In a court of law, people are seen to be innocent until proven guilty, but with the tax authorities they see people as being guilty until proved innocent.

"You can supply all the evidence you've got, all your salary slips, your chequebooks, literally everything, but the taxman still comes after you."

And Mr Matharu said: "You just keep hoping and hoping that someone is going to listen."

The investigation was carried out to investigate claims that more than 1.5m Britons were given the wrong tax bills last year.

500m tax write-off claim denied
03 Sep 07 |  Business
Income tax errors hit 1m people
05 Jul 07 |  Business

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