Malcolm Kyle

By Simon Cox

BBC Radio 4′s The Report

Up to £1.5bn of unpaid tax is likely to be written off by HM Revenue and Customs, insiders have told the BBC.

Staff said the vast majority would not be pursued because the cases involved were over two years old and open to legal challenge from taxpayers.

There is a backlog of 7.5 million cases of tax underpayment or overpayment – the latter estimated at £3bn which will be reimbursed – dating back to 2007-8.

An HMRC spokesman said no decision had been made on underpayment cases.

The details come just weeks after it emerged a further six million people had been wrongly taxed in the past two years, with 1.4 million people who underpaid set to receive an unexpected tax bill.

The latest cases to emerge, which are part of a huge backlog of open cases dating back to 2007/8, are not on the HMRC’s new computer system and will have to be dealt with manually.

‘Frustrating’

Front-line staff at HMRC have told The Report on Radio 4 that only those cases that verge on fraud will be pursued.

Cases where money is owed to taxpayers by the Exchequer will still be processed.

One staff member told the BBC: “For each underpayment there are thousands of pounds owed. Underpayments are very frustrating.

“If we had the chance to sort it out three years ago we could have recovered the money. It is now likely to be written off if it’s over two years – we’re not looking at underpayments beyond two years.”

The staff member added: “Our directors are telling people that [those who owe tax] will appeal and fight it and this will generate more work.”

Another staff member who has worked on open cases said that in their experience the underpayment of tax was never pursued.

“These people who have underpaid earn 30, 40, 50k a year and got benefits such as a company car and we’re not told about them until after the tax has been paid.”

The staff member added: “The cases cannot be dealt with by the new computer as they have to be done manually – what did we do with the cases older than two years? We wrote them off.”

The delay in handling these open cases is due to a combination of a historic backlog, which once reached 30 million, the additional work created by problems with the new computer system and a shrinking number of staff.

‘Future decision’

“But while we are reviewing the cases of underpayment, no decision has been made on on these cases.”

He added: “It’s a provisional period, where staff have been asked to review underpayments. If they find someone who has underpaid then that is set aside for a future decision.

“We are going to be looking at at how best to deal with these. We are going to look at the specifics of each case and apply a normal criteria in due course.

“Those who have underpaid, they will be part of the overall decision-making process – no decision yet on what to do with them. But they are being identified.”

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Sep 20 2010 – Daily Record

By Torcuil Crichton

WEALTHY tax dodgers face a “ruthless” crackdown over the next four years that will raise more than £7billion for the Treasury.

The get-tough measure was unveiled at the Lib Dem conference by Treasury Secretary Danny Alexander.

It’s his bid to reassure party activists that the government coalition is committed to fairness.

Alexander said an extra £900million will go to HM Revenue & Customs over the next four years to tackle “morally indefensible” tax avoidance and evasion.

That will pay for a team of investigators to track down money hidden in offshore accounts and to run more thorough checks on tax returns put in by people making more than £150,000.

There will also be investment in cyber crime specialists to protect the taxman’s electronic systems from attack and more detection technology designed to prevent alcohol and tobacco smuggling.

Alexander also criticised those who use legal tax dodges to cut their tax bills.

He said: “To those who hire accountants to dream up a clever new tax dodge, I say this, Think again. We are all in this together – and that means you, too.”

The move overshadowed a subtle signal from Lib Dem leaders that they were preparing to means test universal benefits like the pensioners winter fuel allowance and child benefit.

In the clearest signal yet that the better off could be stripped of their universal welfare payments, Nick Clegg said he would be happy to give up his family’s £2450-a-year child benefit.

The Deputy Prime Minister said it was right that those who were “not so much in need” should share in the pain of deficit-reduction measures.

Critics have accused ministers of targeting the most vulnerable with benefit cuts as Chancellor George Osborne seeks massive contributions from the “out of control” welfare budget for next month’s spending review.

Asked if he was prepared to give up state help for his three young sons, he said: “Certainly.

“I think we just need to look in the round at a benefits system which has too many people who are dependent on benefits in the long run who should be encouraged to work. And it provides benefits to people who don’t necessarily feel that acute need in the first place.

“It would be unfair to only deal with those benefits which only go to people on very low means.

“You have to also, because that’s the fair thing to do, look at benefits that go high up the income scale to people who maybe are not so much in need and that’s what we’re doing.”

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