The tax office has finally disclosed how many people were hit by glitches in a new computer system, first noticed in January – 100,000 people paid too much. Some were in the wrong tax band; some had their personal allowance removed; some had even had a "1" inserted at the start of their salary, inflating their taxable income by £100k. I nearly called that hilarious, but I imagine it's pretty unfunny if it's your income, and it's not even that funny when it isn't.
The problem here is not the new computer system (though how government-run computer systems always misfire on such a scale is pretty spectacular), but a systemic tolerance of mistakes on a massive scale across HM Revenue and Customs. The money lost by the Treasury in evasion, avoidance and outstanding debts – the "tax gap" – is put at £40bn a year. There is compelling evidence, laid out by the chartered accountant Richard Murphy that this is an underestimate, and the true figure is more like £120bn a year. Part of me thinks that if HMRC could just sit tight on its own incompetence, the overpayers and the underpayers would balance one another out. It might not be fair, but at least the Treasury wouldn't go bust.
Well, that part of me is the stupid part. The figures don't cancel one another out. The system is flagrantly geared towards the exigencies of the rich, never successfully wringing them for what they owe. Meanwhile, low earners might be squeezed for more than they owe.
And as she notes:
Murphy summarises the classic situation of the overpayer: "It's largely by those on low income, there is very little chance that overpayment is taking place on a large scale by those on a high income. The PAYE system is incredibly effective for people who have one job and are in stable employment, in other words, the postwar settlement. But there are large numbers of people who have to put together a few jobs to support themselves.
"Their personal allowance is set against one income, everywhere else they'll have tax deducted at source. They should send in a tax return but nobody asks them to do it. There are insufficient resources to check each person, to make sure that they are paying the right amount; and to be candid, it is not that straightforward, filling out a tax return."
Pensioners are also big losers from the complexity of this system – for instance, you may have a state pension, a small private pension, a part-time job at B&Q, and be in receipt of benefits – some of which are taxable, some of which aren't. But unless you fill in a tax return, there is almost no possibility that you will be paying the right amount of tax.
And the means of resolving this? As Zoe Williams points out there are three: first, make service to ordinary people a priority. The corporate sector has it now. Second, restore staffing levels. Third, keep local tax offices.
It’s not rocket science. It is possible. And it could resolve the problems of government finance. And yet it is ignored.
Why? What is the policy reason for ignoring tax abuse? There has to be one. It can’t be accident.