Revenue advice centres fail Sunday Times test of 80 tax calls

A Sunday Times article has highlighted flaws in the Inland Revenue's tax advice centres where, the article states, wrong advice is frequently given out. Text follows...

Tom Robbins and Mark Macaskill

SERIOUS gaps in tax officials' knowledge at Inland Revenue advice centres have been exposed in a study. Researchers found that putting the same question to several tax offices often resulted in different answers.

Sunday Times reporters made 80 calls to tax advisory centres around the country, asking each office one of eight set questions. For every 10 centres asked a particular question, between one and eight gave the wrong advice.

The findings are likely to renew concerns over the competence of the Inland Revenue in dealing with customer queries. Each year thousands of British taxpayers pay too much tax as the result of bad advice.

John Davies, head of business law at the Association of Certified Chartered Accountants (ACCA), said: "The findings mirror the experience of our members, who regularly complain about the level of incompetence in the Inland Revenue. They need to do something urgently in terms of training their staff correctly."

The questions were composed by Peter Back, a tax expert at SimpliTax, and Mike Warburton, of Grant Thornton chartered accountants, to represent a range of common tax queries.

Similar studies in America have found helpline operators at the Internal Revenue Service (IRS) are also often confused and the IRS has admitted that 15% of answers given on the helplines are wrong. An audit last month found IRS staff spent more than half their time on the internet surfing for pornography, gambling, share-trading and other recreational websites.

Tax breaks on "furnished holiday lets", holiday homes let for profit, proved to be the biggest stumbling block. Eight out of 10 centres were unaware that holiday homes had to be let for a minimum number of weeks each year to qualify.

Three out of 10 centres said tax relief was available on national insurance contributions for self-employed workers. It is not.

Four out of 10 centres said an elderly couple aged 67 and 62 could not claim the married couple's allowance, abolished for most couples by Gordon Brown last year. In fact, it is still available to those who were aged over 65 in 2000.

"That worries me the most. The amount is not sensational, but as a percentage of a pensioner's income it's likely to be quite substantial," said Back.

While shocking to many, such a high level of error is unlikely to startle the Inland Revenue. Its internal target is to achieve only 75% accuracy when calculating bills.

Last year computer errors resulted in the "loss" of 5.2m taxpayers' records.

Experts also believe taxpayers are routinely and unwittingly overcharged by hundreds of millions of pounds each year. In 1996 the figure was estimated to be £262m by an independent watchdog.

A survey carried out by ACCA found that more than half the members questioned had received incorrect payments from the Inland Revenue. Many were being overcharged by hundreds of pounds.

The Inland Revenue said it went to great lengths to train its advisers, adding: "It is worrying that you appear to have obtained inconsistent answers. We will want to take action to remedy any shortcomings."

Additional reporting: Mark Macaskill, Rachel Dobson