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Chaos and confusion at HM Revenue & Customs may result in £5bn of unpaid taxes not being collected. These cases arise from the years prior to 2007-08 which HMRC may not be able to collect due to time limits imposed by the government this year. After April 2011, any monies owed by the taxpayer for 2006-07 and before, cannot be pursued. As cuts across the government take hold, HMRC will not be able to chase £1.6bn of unpaid tax. For anyone unsure of the time limits it is advisable that you employ the services of an accountant firm before responding to any tax demands received.

Dame Lesley Straithie, at a hearing with the Commons Public Accounts Committee, admitted that HMRC only discovered that the money owed after a new Pay As You Earn system was installed, which left it too late to pursue the outstanding debt. The new system isn’t able to tell officials just how much money will be lost but Ian Liddell-Grainger, a Conservative backbench MP as well as being a specialist in PAYE, estimates the total sum to be written off for the years 2004-05 to 2006-07 to be £4bn or £5bn.

HMRC are currently working on repaying tax of £1.8bn to customers for 2008-09 and 2009-10, while collecting £2bn which is owed by taxpayers. Officials are also dealing with cases from 2007-08 which was originally estimated at £1bn owed to the taxman. However at the recent hearing, Dame Straithie admitted it may only be able to collect £50m.

Enlisting the help and advice of a low cost accountant firm could help you avoid an unexpected demand for tax or even alert you to the fact that you are owed a repayment of tax from HMRC.

About The Author

Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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