Money Mail investigation: HMRC's merciless tax raid on the elderly and weak

  • Widow, 95, asked for £4,000 to be paid by January 31

HM Revenue & Customs stands accused of conducting a merciless assault on the weak and vulnerable in its headlong rush to squeeze every last penny out of taxpayers.

Money Mail has uncovered damning evidence that pensioners and others on low incomes are bearing the brunt of HMRC's attempts to recover tax lost through its own errors. And we have seen three disturbing new aspects to the fiasco.

First, pensioners are being hit with massive tax bills payable by the end of this month, under the self-assessment regime. Second, some of the tax demands now being sent out are themselves wrong. Third, appeals on very similar cases are being handled differently.

Cases seen by Money Mail include:

  • a 95-year-old widow who has received a demand for nearly £ 4,000 to be paid by January 31;
  •  a pensioner who was initially asked for more than £800, but on challenging it received a new bill for £7, with no explanation and no apology;
  • a woman who was forced to take early retirement through ill-health being asked to pay more than £2,000 under self-assessment by the end of this month - even though she has never filled in a self-assessment form.

John Andrews, chairman of volunteer organisation the Low Incomes Tax Reform Group, says: 'A high proportion of tax demands are going out to pensioners and those on incapacity benefit.

'By definition, those on low incomes are less likely to have tax agents acting for them because they cannot afford it, so their tax is more likely to be wrong.

'These are people who already have to budget very carefully, yet they are now receiving bills, often because the revenue had the information and did not do anything with it.'

There is mounting evidence that some of these new tax bills are themselves wrong but, because HMRC has failed to provide proper calculations, it can be impossible to check whether or not the bills are correct.

Carol Pavely, of the charity Tax Help for older people, says HMRC is often fobbing off those who complain with standard letters.

'We are not pleased with the way pensioners are being told about the bills and we are not pleased with how HMRC is dealing with their complaints. This reconciliation was supposed to put things right, but it appears HMRC is still making mistakes.'

Tax experts also complain that HMRC is not dealing with appeals consistently. In one case, two people with identical jobs and salaries at a small firm who both received medical insurance were sent a bill for the cost of the benefit, even though it was the employer's mistake. When both appealed, one had their bill written off, and the other had their appeal rejected.

Elaine Clark, of tax firm Cheap Accounting, has 16 volunteer accountants working part-time to help pensioners who are baffled by their tax demands.

She says: 'I know we are in a recession, but the taxman should not be targeting the elderly and vulnerable in this way.'

Last week, HMRC said it would pursue another 450,000 cases from the 2007/08 tax year. But Ms Clark says: 'They must have had all the information available to be able to issue demands now, but they failed to act on the information and allowed more than two years to elapse. In that case, taxpayers can claim exceptional circumstances.'

Taxpayers who made all the relevant information available to HMRC can appeal against demands under a clause known as Extra Statutory Concession A19. This clause, buried on page 15,914 of the tax book, was highlighted by Money Mail in September last year.

It states that where taxpayers believed their tax code was correct and HMRC had all the relevant information but failed to act on it, the tax demands should be written off. To date, 20,711 have appealed to HMRC using ESC A19 and 6,310 have been successful. This concession has forced the government to write off 250,000 bills for those whose problems were caused by HMRC failing to tax their state pension properly. 

Template letters showing how to complain can be found on our sister internet site You can also find help on internet sites run by the low Incomes tax reform group at and tax Help for older people the latter will also help free of charge pensioners on lower incomes who call it on 0845 601 3321.

Calls to this number more than doubled at one stage last year - they eventually dealt with 31,500 cases compared with 19,000 in 2009. As a charity, they have very limited resources, so if you get an answering machine leave your name and number and please be patient.

An HMRC spokesman says: 'The ESC A19 concession requires the customer to have a reasonable belief their tax affairs are in order. HMRC developed this concession to make sure the tax system is balanced and fair.

The fundamental point remains that people can't devolve all responsibility for their tax situation to HMRC.'

In the latest twist to the tax fiasco, the prison officers' association has discovered that HMRC has wrongly taxed pensions for employees forced to retire through work-related assaults, injuries, illnesses and accidents during the past nine years. rules making these pensions taxexempt also apply to the NHS, Fire and Rescue Service, Police and Armed Forces personnel.

Granny's  £4,000 bill

Lauren Frew was horrified when her 95-year-old grandmother Beryl Frew received a demand for £3,946.27 to be paid by the end of this month.

Ms Frew attempted to query the bill on behalf of her frail grandmother, but HMRC officers refused to speak to her on the phone.

She has written questioning the bill, but has had no response.

Mrs Frew, a retired deputy headteacher, has previously had small self-assessment bills. She has a pension from her job and a small pension from her husband, who worked as an engineer for the National Coal Board before he died in the Sixties.

Her tax situation has not changed for more than 20 years, other than a drop in income as savings rates have fallen.

'If she owes the money then she wants to pay it. But there is no explanation. It is just a demand that has been issued under self-assessment,' Lauren says.