£5,541 tax bill after tick­ing the wrong box

The Daily Telegraph - Your Money - - YOUR MONEY -

As an 83-year-old re­ceives a ‘men­ac­ing’ de­mand, Sam Mead­ows asks why so many elderly peo­ple have to fill in tax re­turns

An 83-year-old who “ticked the wrong box” on a self­assess­ment tax re­turn re­ceived a let­ter from HMRC re­quest­ing im­me­di­ate pay­ment of £5,541 for un­paid Na­tional In­sur­ance con­tri­bu­tions from the Seven­ties and Eight­ies. The claim went back to a pe­riod be­tween 1978 and 1994.

The case emerged in the wake of the dis­clo­sure by Tele­graph Money that 1.7 mil­lion pen­sion­ers con­tinue to face the ar­du­ous task of fill­ing in a tax re­turn every year – with 275,000 of those above the age of 80. Cam­paign­ers say it high­lights the com­plex­i­ties in the tax sys­tem, and the need for more elderly – of­ten lower-in­come – tax­pay­ers to be ex­empt from fil­ing re­turns.

Anne Fun­nell, 83, has been com­plet­ing a tax re­turn for many years. But an ac­ci­den­tal slip on her lat­est sub­mis­sion re­sulted in the un­ex­pected re­quest for pay­ment. The re­tired artist, who lives near Nor­wich, said the let­ter was threat­en­ing.

“It re­quested more than £5,000 and it said: ‘This is due im­me­di­ately. If you pay late or don’t pay you may lose your right to a state pen­sion and ben­e­fits, and a pri­vate debt col­lect­ing agency may come to your home’,” she said. “I re­gard that as threat­en­ing and men­ac­ing. It’s as near to black­mail as you can get.”

Mrs Fun­nell said HMRC had con­tacted her to say she had made a mis­take on her re­turn – which she ac­cepts – and it has apol­o­gised to her for send­ing the let­ter, which it ad­mit­ted was er­ro­neous.

An HMRC spokesman said: “We have apol­o­gised to the cus­tomer be­cause the payslip was is­sued in­cor­rectly, and we’re work­ing to en­sure that this does not hap­pen again.”

For­mer pen­sions min­is­ter Steve Webb, now at mu­tual in­surer Royal Lon­don, is among those to high­light the is­sue of pen­sion­ers be­ing re­quired to take on the com­pli­cated and con­fus­ing task of com­plet­ing a tax re­turn far into their later years.

Be­cause of the size of most pen­sion­ers’ in­comes, amounts col­lected are likely to be very small. Mr Webb said HMRC needed to ques­tion whether the time, money and ef­fort that went into mak­ing the elderly fill in tax re­turns was worth it. “In many cases we are talk­ing about very small amounts of money,” he said. “You are putting peo­ple later in life through huge amounts of has­sle and stress and at the end of the day you could be tak­ing pounds or pence. Yes, if some­one is a mil­lion­aire we should be get­ting tax from them. But if it’s a case of a very small amount, you have to think, is this pro­por­tion­ate?”

He also said it was im­por­tant not to aban­don those who were less com­fort­able with a dig­i­tal tax­a­tion sys­tem. He ex­plained: “In my ex­pe­ri­ence, the more they as­sume that ev­ery­one is on­line, the worse the ser­vice will be for those who are not. There are an aw­ful lot of peo­ple be­ing forced to jump through hoops for very lit­tle real ben­e­fit to the tax­payer.”

The HMRC spokesman said: “The vast ma­jor­ity of pen­sion­ers do not need to fill in tax re­turns and we are tak­ing thou­sands of them out of self­assess­ment every year.”

Anne Fun­nell: ‘ HMRC’s let­ter is threat­en­ing. It’s as near to black­mail as you can get’

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