Tax payers are paying more than they should

Thu, 02 Feb 2006

Financial experts claim that millions of tax payers are paying too much because of the way Gordon Brown has been changing the system.

The whole tax code system is now very complex and the Inland Revenue are finding it hard to understand it. The standard guide to UK taxes has doubled in size since 1997 to 9,000 pages.

A study conducted by Mark Nicholson, of the think tank the Bow Group, found that 3.8 million people are paying incorrect taxes, mostly too much rather than too little. The people who are most at risk of paying the wrong amount are the self assessment tax payers who find the calculations difficult.

Mark Nicholson said, "The complexity and chaos of the system shows how much the state bureaucracy has become a Frankenstein’s monster.

"It is out of control and no one seems to have a firm handle on it. Some people are paying too much and some too little."

Mike Warburton, of Grant Thornton accountants said, "A lot of PAYE code are wrong and what analysis there has been suggests that people tend to overpay rather than underpay."

George Osborne, shadow chancellor said, "This report is evidence that millions of people are paying the price for Gordon Brown’s obsession with complexity in the tax system."

The study concludes in its report that the system needs to be simplified by cutting the number of tax bands to three. The re-introduction of the single personal allowance is also suggested, rather than differences based on age and marital status.

Matthew Elliott of the Tax Payers’ Alliance said, "Whether you believe in high taxes or in low taxes, everyone agrees that the tax system should be transparent and understandable."

According to the reports findings £575 million of tax due through the PAYE system was not collected in 2004/5 and there was still £1.24 billion of National Insurance outstanding which was due last April.

A spokesman for the Treasury said that the "vast majority" of cases people were paying the correct amount of tax. Because of the increasing complexity of new the pension system, the spokesman blamed Gordon Brown.

He said, "Inevitably you’re going to get more complication when moving to a new system. People generally pay what they should pay and in the vast majority of cases it’s working fine."
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