HMRC permanent secretary for taxes Dave Hartnett is fighting for his job after bowing to pressure over the weekend to apologise for the volume of this year’s PAYE underpayment claims.
On Saturday morning, Hartnett added fuel to the media frenzy surrounding the PAYE claims by telling BBC Radio 4’s Moneybox programme he “saw no need to apologise” to the 1.4m people who are being asked to pay additional amounts of tax to offset inaccurate tax codes.
“I’ve read the papers and heard stories of HMRC blunder and IT failure. Neither of those are true,” Hartnett said. “Every country that I know of that has deductions of tax has to do a reconciliation at the end of every year and were’ doing one.”
Pressed by presenter Paul Lewis on the sheer size of this year’s miscalculations, the tax chief responded, “I don't think they are extraordinary. There is a need for reconciliation every year. Once or twice in the past the numbers have been very large, sometimes they're less. It depends on how the system has been operating and what issues there have been.”
The Daily Telegraph reported that Chancellor George Osborne was “incandescent” after hearing Hartnett’s Moneybox interview. Later on Saturday afternoon – in time to meet Sunday newspaper deadlines – HMRC issued a statement in which Hartnett conceded, “I am deeply sorry that people are facing an unexpected tax bill.”
He continued: “Everyone in HMRC is working hard to make this as painless as possible. I apologise if my remarks came across as insensitive. I am working flat out with my colleagues to ensure everyone’s tax is correct and the new computer system will help us do this.
“It was this new system that revealed the extent and size of reconciliations required and will help us be more accurate in future but we do not underestimate the distress caused to taxpayers and once again I apologise.”
The Independent reported that the Liberal Democrat Treasury spokesman in the House of Lords (corrected: see comment below - Ed), Lord Oakeshott, had called on HMRC’s permanent secretary to resign.
The Lib Dem spokesman said Hartnett's response to the tax crisis made the BP chief, Tony Hayward “look like a model of disaster management and accused him of living in a world of his own.
“This is the latest in a series of management failures in the HMRC going back many years,” Lord Oakshott added. “If Mr Hartnett cannot see why he should apologise for this one, then he really should be reconsidering his own position.”
AccountingWEB.co.uk members have been debating the latest episode in the HMRC PAYE crisis in this Any Answers thread: Is this man arrogant, or just deluded?
UPDATE: Monday 13 Sept - The Financial Times reported a Treasury statement backing Hartnett in what the paper characterised as an attempt to bring the PAYE crisis to an end. “The chancellor thinks that Dave Hartnett did the right thing in apologising following his interview yesterday. The right thing today is to focus on putting things right, and for Dave and HMRC to get on with doing everything they can to help those facing additional bills,” the Treasury said.
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