Her Majesty’s Revenue & Customs has denied trying to shift the blame to employers for a National Insurance blunder that could mean millions of people are not entitled to a full state pension.
The entitlement problem came to light after an All Party Parliamentary Taxation Group found that about 9.3 million NI payments made between 2004 and 2009 did not match workers’ records.
Although HMRC denied it had lost £1.3 billion in contributions, the money, which had all been collected, was not apportioned to the correct taxpayer in all instances, leading to a deficit of about £138 per affected person.
The fear is that the nine million workers in question will not receive a full state pension as they are only entitled to one after having paid tax for at least 30 years.
HMRC denied that it was at fault for payments not matching workers’ records, however, saying that it received 48 million P14 forms each year from employers, which contained details of the tax and NI paid by their staff.
“HMRC matches these P14s to individuals’ national insurance records. In a small proportion of cases, we cannot match these records because employers provide insufficient details about their employees on the P14,” it said.
Such gaps might occur due to simple administrative errors such as the staff member giving their employer the incorrect NI number or a number being entered wrongly onto the form, it continued. In such cases, the employer would be contacted and either asked to correct the mistake or HMRC would write to the employee concerned, the organisation said.
But employers reacted angrily to the suggestion that they were to blame. Phil McCabe from the Forum of Private Businesses, told the Daily Mail: “HMRC has got a track record of poor administration, poor levels of service and inefficiency….Our tax system needs to be simplified.”
Andrew Cave, a spokesman for the Federation of Small Businesses, added: “We are concerned that HMRC is failing in its duty to keep proper records and is letting down employers by not informing them when insufficient information is supplied. It is imperative that HMRC look to rectify this as a matter of urgency.”
HMRC later sought to play down the row by attesting that it was not pointing the finger at employers. “A small proportion of P14s don’t match – the taxpayer could have gone abroad or could be a migrant worker, for instance. The point is the monies paid are never lost and if the taxpayer reappears and gets in touch, we can easily apply their NICs to their account,” it said.
