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Inland Revenue And Paye Assessments

Volume 415: debated on Thursday 4 December 1980

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My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what action they are taking to remedy the Inland Revenue's erroneous assessments of PAYE liabilities.

My Lords, the Inland Revenue have strengthened their regional office management by introducing 60 inspectors whose function is to monitor by selective sampling the quality of work performed by staff in tax districts. Their findings will be considered both locally and centrally, in particular to judge quality and decide on any remedial action; and the department will seek to improve quality in appropriate work areas by reinforcing their methods of supervision and reviewing their work procedures.

My Lords, while thanking my noble friend for that reply, may I ask whether he can indicate whether the Board of Inland Revenue themselves are disturbed at having to inform the Public Accounts Committee in another place that 27 per cent. of these assessments for PAYE were erroneous; and could he, perhaps, add whether that was the state of affairs—which I do not believe it was—when he, himself, was the youngest-ever Commissioner of Inland Revenue?

My Lords, while I greatly appreciate the compliment in my noble friend's supplementary question, may I answer the first part of it by saying that the board themselves are very concerned indeed with the situation that has been revealed. It was revealed as a result of a special study initiated by the board themselves. They are now taking vigorous action to deal with the matter and this action will be followed up.

My Lords, can the noble Lord tell the House a little more than that on the subject matter of this Question which, I understand, concerns what action the Inland Revenue are taking to remedy these erroneous assessments?—which I take to mean the assessments that have already been issued. What steps are they taking to correct the errors as far as individual PAYE taxpayers are concerned?

My Lords, where errors are discovered, they are corrected if they fall outside the tolerances which are normally applied. The position is that where a person has underpaid his PAYE by a figure which was £20 in the period in question but which has now been increased to £30, it is not the normal practice to make an assessment. Correspondingly, if the over-payment was less than £1 it was not customary to make an assessment and repay the money unless the taxpayer asked for this to be done. Where errors are found, the normal procedures are followed, but the obvious objective is to ensure that the number of errors made is reduced to an absolute minimum.

My Lords, would my noble friend not agree that erroneous assessments of the future might be limited if a British-made computer was used in the Inland Revenue?

My Lords, that is an entirely different Question. I believe that it is the experience that errors tend to be made under a computerised system as well as under a manual system; and many of us can pay testimony from our personal experience to that fact.