Double edged sword for millions of Brits after HMRC error

6 million people are to receive a tax refund in the region of £400-600 following an error made by Her Majestyís Revenue and Customs (HMRC).

HMRC have overcharged taxpayers dating as far back as 2001, extracting a total of £2.5 billion in excess tax.

With high inflation and the rising cost of living putting pressure on the nationís personal finances, the tax rebate could not come at a better time for many.

However, the news is not entirely positive for consumers. Approximately 1.2 million people, including around 150,000 pensioners, will receive a bill for £600 having under-paid for their tax.

This could cause widespread problems for many who are already struggling to cover everyday expenses. Those who have under-paid are expected to owe an average of £500 to £600 each.

Individuals will have the option to pay tax back over a period of time by having their tax code adjusted, or simply pay the full amount via cheque.

Those who are due a tax refund will receive a cheque over the next few weeks.

This is the second year that the HMRCís new computer system has identified discrepancies with tax and National Insurance.

The rebates relate to overpayments of tax in the 2007-08 period, or earlier in some cases, and will include interest.

HMRC has faced frequent criticism following an error in the system last year when 4.3 million people were due refunds for overpayments, and some 1.4 million owed the taxman after paying too little.

Jesse Norman MP, a Conservative member of the Commons Treasury committee, told the Telegraph; ìThe Revenue is still having to deal with the legacy of ill-judged reorganisations and change under the last government.

ìThis news will come as a nasty surprise to some people, and as a nasty surprise to the Government that will have to find the money for millions of reimbursements.î

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