By Jaimie Kaffash
23 October 2009
Up to 1.5 million elderly people are paying too much tax due to failures in Revenue and Customs systems, the National Audit Office has said.
In a report released today, the NAO said that tax overpayments from 1.5 million elderly people totalled £250m. At the same time, underpayments from 500,000 elderly people amounted to £100m. This was particularly an issue for those reaching pension age because of the complications caused by multiple sources of income, including pensions.
Auditor general Amyas Morse warned that these failures were costing taxpayers in the long run. ‘Older people want to pay the right amount of tax but too many pay more than they need to because they do not claim allowances to which they are entitled and because of errors. By providing a more coherent service, R&C could make substantial savings as the number of enquiries from older people about their tax affairs would reduce. A win-win situation for all.’
The auditors recommended that R&C should work more closely with the Treasury to simplify the system by removing the link between age-related allowances and income. They also said that the department must take steps to ensure that elderly people are receiving their entitlements, such as the Blind Person’s Allowance, by working with local authorities to help identify those eligible.
Automatically awarding allowances on reaching pensionable age and recovering any overpayments at the end of the following year would also cut down the cost to the taxpayer, they added.
Edward Leigh, chair of the Public Accounts Committee, said that any system reform would benefit R&C as well. ‘Making this system simpler makes financial sense for R&C. Already it costs the department twice as much to deal with tax enquiries from older people as it does for dealing with ones from other taxpayers and so its costs are likely to rise as more and more people live longer.’
23 October 2009
Up to 1.5 million elderly people are paying too much tax due to failures in Revenue and Customs systems, the National Audit Office has said.
In a report released today, the NAO said that tax overpayments from 1.5 million elderly people totalled £250m. At the same time, underpayments from 500,000 elderly people amounted to £100m. This was particularly an issue for those reaching pension age because of the complications caused by multiple sources of income, including pensions.
Auditor general Amyas Morse warned that these failures were costing taxpayers in the long run. ‘Older people want to pay the right amount of tax but too many pay more than they need to because they do not claim allowances to which they are entitled and because of errors. By providing a more coherent service, R&C could make substantial savings as the number of enquiries from older people about their tax affairs would reduce. A win-win situation for all.’
The auditors recommended that R&C should work more closely with the Treasury to simplify the system by removing the link between age-related allowances and income. They also said that the department must take steps to ensure that elderly people are receiving their entitlements, such as the Blind Person’s Allowance, by working with local authorities to help identify those eligible.
Automatically awarding allowances on reaching pensionable age and recovering any overpayments at the end of the following year would also cut down the cost to the taxpayer, they added.
Edward Leigh, chair of the Public Accounts Committee, said that any system reform would benefit R&C as well. ‘Making this system simpler makes financial sense for R&C. Already it costs the department twice as much to deal with tax enquiries from older people as it does for dealing with ones from other taxpayers and so its costs are likely to rise as more and more people live longer.’
