No taxation without calculation!

Generally speaking, I’m a big fan of tax. It pays for schools, hospitals, roads, disability and unemployment benefit, and all the other things that, way back when, we as a society collectively realised it would be damn stupid to hope the free market would provide. (It also pays my wages, since I work for the NHS, so I have a bit of a vested interest in it). Perhaps unsurprisingly, then there’s very little that pisses me off more than people complaining about paying their taxes, particularly as in my experience those most likely to moan are also the ones least likely to be suffer any kind of pecuniary hardship as a result of paying their taxes.

With that said though, yesterday’s announcement that over a million people are going to have to pay more tax next year to make up for the fact that HM Revenue and Customs undercharged them this year is a bit of a special case. The 1.4 million people who paid too little will have to pay an average of over £1,400 extra in tax next year. 50% of earners in the UK make less than £20,000 (figures from 2007). If you were earning that, you’d probably take home about £1200-£1300 a month (depending on deductions for pensions etc). So if you’re earning less than the median, you could effectively lose more than a month’s wages next year because of a miscalculation that had nothing to do with you (the underpayment effects employees whose tax is paid by their employer, so the errors were either HMRC’s or the employers’). When you’re on that kind of wage, and especially if you have bills to pay and dependents to feed, that could make life pretty damn unpleasant. Apparently if people think they’re being unfairly charged there’s a form they can fill in (they need to demonstrate that HMRC had all the right information and calculated wrong), but given that HMRC is one of many government departments being cut to the bone, what’s the likelihood that scarce resources will be prioritised to deal with them? And how many people are going to be put off making a claim because they find the forms too complicated? (Tax forms aren’t traditionally noted for their clarity or simplicity, after all.)

In cases like this the burden of proof shouldn’t be on individuals. If people pay too little tax thanks to a miscalculation, the onus should be on HMRC to demonstrate that they didn’t screw up, not on individuals to prove that they did. If it turns out to be the employers’ fault, then maybe they should pay the difference rather than HMRC. But making poor people lose out on more than £100 a month because of someone else’s mistake just doesn’t add up.