Page last updated at 12:42 GMT, Wednesday, 8 September 2010 13:42 UK

Gauke: Recovery of unpaid income tax will be 'painless'

The government will seek to reclaim unpaid income tax "as painlessly as possible", Exchequer Secretary David Gauke has pledged.

HM Revenue & Customs (HMRC) is simultaneously trying to recover £2bn that was underpaid in the past two tax years, and to repay £1.8bn that was overpaid.

Outlining a series of measures designed to ease the pain on people hardest hit by repayments, Mr Gauke said the country "simply cannot afford" to write off all of the underpayments.

Mr Gauke made the statement on 8 September 2010 in response to an urgent question by the SNP Treasury spokesman Stewart Hosie after HMRC started sending out nearly six million letters to individuals who paid too much or too little income tax.

Around 4.3 million people are due a rebate, but some 1.4 million will have to hand over an average of £1,428 each.

Those owing under £2,000 will have the money deducted from their salaries on a monthly basis from next year, Mr Gauke said, while people owing more than £2,000 would be contacted by HMRC to discuss payment options - though he stressed that "no immediate one-off payment" would be required.

The letters would be sent out between now and Christmas to make the process manageable, Mr Gauke said.

He added: "In cases of genuine hardship, HMRC will allow payments to be spread across a period of three years."


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