HMRC says it has abandoned attempts to collect the money because it was so stretched and it wanted to keep workloads manageable.
This follows concern highlighted by the National Audit Office (NAO) which said it feared RTI was placing too much pressure on the department. A spokesperson for HMRC was unrepentant and insisted that either HMRC or the NAO had an idea of the exact figures suggesting they were only estimates.
The spokesperson said: “This was caused by a combination of events – widely reported at the time – that affected the tax years between 2003 and 2010. The figures are estimates, and neither HMRC nor NAO can give actual numbers for tax foregone and taxpayers affected.”
The spokesperson suggested two factors explained the lost revenue, admitting it didn’t allow enough time to work through the backlog of unresolved cases: “The bulk of the tax foregone across this seven year period was down to two main factors: our decision to raise the tax threshold for three years while we stabilised the PAYE IT system and our inability at the time to work through a backlog of unresolved tax cases within the legal timeframe.
“When these problems came to light in 2010, we promised to clear all outstanding ‘open’ cases by the end of 2012. We have delivered on that promise, clearing over 30 million cases over the past three years and bringing the PAYE system up to date.”