The Daily Telegraph - Saturday - Money
£5,541 tax bill after ticking the wrong box
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.”