Filed under: Tax
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According to the Lancashire Evening Post, former furniture upholsterer and Lancashire county councillor Don Yates initially misread the first demand, for over £384,000, as £384. A month later, a £576,000 bill arrived.
Mr Yates lives in an £80,000 terraced house and has an income of £11,000 a year. "I'm asking if I can pay £1 a week," he joked. "Obviously, if they want it, I've not got it."
He has contacted HMRC and arranged a meeting to discuss the bill.
HMRC refuses to say how often it makes mistakes when calculating tax bills. However, in a September 2012 report, law firm Pinsent Mason analysed HMRC data to conclude that most complaints were justified.
"The number of cases where HMRC has admitted it got something wrong is remarkable," commented George Gillham, a tax expert with the firm. "HMRC is prone to making errors - it's unfortunate, but it's true. This is partly down to budget cuts leading to de-skilling on the frontline, but it's also to do with the massively increased complexity of the tax system over the past fifteen years."
Taxpayers who believe that HMRC has got it wrong can complain directly to the department. If the complaint isn't upheld, the next stage is to appeal, again to HMRC itself. If this, too, is unsuccessful, the complaint can be referred to the independent Adjudicator's Office. Finally, as a last resort, an appeal can be made to a taxpayer's MP to refer the complaint to the Parliamentary Ombudsman.
In October, the Tax Adjudicator, Judy Clements, criticised HMRC for the high volumes of complaints she was receiving, particularly about PAYE. "I am disappointed at the number of complaints HMRC customers feel they need to refer to me in order to get resolution," she wrote. "My role should be to consider the difficult exceptions, not handle routine matters that are well within the capability of departmental staff to resolve successfully."
But UK taxpayers can take heart from the fact that HMRC is not the only tax office to make mistakes - nor is it the worst offender. Last year, a 22-year-old Austrian man was horrified to receive an tax bill for more than €29 million - on a salary of €600 per month.