Tax & Accounting News

HMRC under fire over huge tax backlog

23/07/2010

HM Revenue and Customs (HMRC) has been criticised by government spending watchdog the National Audit Office (NAO) after failing to deal with a massive backlog of unresolved income tax cases.

The NAO identified around 18.2million cases which had not been dealt with, of which around half involved under or overpayment of tax.

HMRC acknowledged that there were problems, but said cuts to its own budget would impact on its ability to resolve them, a stance backed by the Chartered Institute of Taxation (CIOT).

The NAO, which scrutinises HMRC’s accounts each year, also said the department needed to improve its collection rate for tax credits debt, which was substantially lower than its rate for other tax debts.

The total stock of tax credit overpayments now totals £4.5billion, and the NAO called on HMRC to pursue debts that could be recovered cost-effectively and write off the others.