A spike for the .gov Personal Tax Account website looks assured, as the taxman is found overcharging taxpayers by £625 each.
The taxman making false assumptions about "dividends or freelance work" is one of the key contributors to him overcharging taxpayers — by a hefty £3.5billion.
Accountants UHY Hacker Young uncovered the swingeing figure — applicable to income tax last year — which is based on 5.6million Brits paying HMRC more than they owed.
Last night, tax experts told Moore News of their shock at the £3.5bn overpayment, which averages £625 too much per taxpayer going to HMRC.
'Everybody should check they're not among the HMRC overpayers'
Dolan Accountancy said it was "staggering," and "at a time when every penny counts," it urged taxpayers to 'check you're not one of the HMRC over-payers.'
DNS Accountants called £3.5bn "astonishing," but warned that atypical workers are at greater risk due to the "complex nature of their income streams."
Carolyn Walsh, a former tax officer, told Moore News that HMRC isn't required to flag up overpayments, because it expects everyone to correct any errors via their Personal Tax Account.
'Incorrect tax codes, partly due to dividend or freelance work assumptions'
Even the income tax disclosure of charging £3.5bn that it wasn't due didn't come from HMRC coming forward.
Instead, UHY Hacker Young had to prise the figure out of officialdom by using freedom of information rules.
"This overcharging through the PAYE system largely stems from HMRC issuing incorrect tax codes," UHY Hacker Young said in a statement.
"HMRC issues the incorrect tax codes due to…[four reasons, including] incorrect assumptions about an employee's additional income, such as rental income, dividends or freelance work that they are no longer doing."
'Common causes of overpaying'
According to Chart Accountancy, "common" causes of overpaying tax include outdated codes, delayed payroll updates, multiple jobs, and unrecorded changes in income/benefits.
"Missing pension contributions that are not reflected in the tax code also result in workers paying more tax at source than they should," Justin Go, personal tax accountant at Chart Accountancy, told Moore News.
"The problem is worse for higher earners who no longer have to file Self-Assessment.
"Many rely solely on HMRC's automated Simple Assessment to reconcile tax, which may be delayed, contain errors, and give only a limited time to respond. Missed corrections can lead to HMRC demanding payment or automatically coding it into the next year."
'Regularly checking your PAYE record and tax code is essential'
Chart's Mr Go continued: "And even lower earners can be affected if small benefits, incorrect pension deductions, or other employment changes are misapplied.
"[Regardless of taxpayer-type, HMRC] leaves the responsibility on taxpayers to monitor their codes. Therefore, regularly checking your PAYE record and tax code is essential to reclaim money lost to HMRC errors."
Previously an inspector of taxes, Ms Walsh said contractors should treat her old boss's Personal Tax Account (PTA) tool in the same way that most now regard online banking.
To read Simon’s article in full, please visit ContractorUK where this article was first published (and where Moore News is the primary editorial supplier.)