UK Inland Revenue Overpays £50 million In Pension Tax Rebates

by Robert Lee, Tax-News.com, London

07 November 2002

It emerged this week that due to a fault in the Inland Revenue's £220 million computer system, overpaid tax rebates to the tune of around £50 million must now be clawed back from UK taxpayers.

According to reports, the mistaken rebates were issued because the National Insurance Recording System 2 (Nirs2) failed to recognise amendments made to tax returns, instead classifying them as separate records. This led to taxpayers who had chosen to contract out of the State Earnings Pension System receiving higher rebates than they were entitled to over a period of five years.

Speaking to the press this week, the Association of British Insurers (ABI), which was informed of the glitch in September, announced that it is working with the tax authority to 'reach a solution which ensures that customers suffer no financial disadvantage'.

However, this is not the first time that the Nirs2 system has failed. Earlier this year, taxpayers were overcharged by some £33 million as a result of a software problem with the Inland Revenue's PAYE system and Nirs2.

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