Income tax errors hit 1m people

The National Audit Office (NAO) says in 2006-07, the Revenue calculated the tax correctly in 95% of cases.

Once corrections were taken into account in the remaining 5% of cases, £125m went uncollected, but £157m was also overpaid.

HMRC said it had "initiatives in place" to reduce over and underpayment.

"HMRC has improved its processing of income tax returns, but there are still substantial numbers of taxpayers who are affected by processing errors," said Sir John Bourn, head of the NAO.

"Vulnerable groups such as pensioners are likely to be disproportionately affected," he added.

Anxiety

Other groups of taxpayers likely to be affected by mistakes were those with complex affairs, such as people with several jobs.

The average underpayment per person was £250, while the average overpayment was about £290.

In general though, the NAO found that the Revenue's plans to computerise its clerical processes had led to a general decrease in the number of mistakes being made.

Edward Leigh MP, chairman of the public accounts committee, said: "Errors don't only cause financial problems, they also result in anxiety and wasted time and effort in putting matters right.

"Many of the people who are affected are vulnerable members of society and deserve better," he said.

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