HMRC’s new IT system will “mean more people paying exactly the right tax at the time than ever before” – which could not come at a better time following reports that around 4.3 million people have been paying too much tax.

While the taxman will be handing back money to those affected, 1.4 million are reported to not have paid enough.

The issue came to light following the implementation of HMRC’s new IT system in June 2009, which holds all the information on an employee in one place, rather than having it spread over several different systems. This makes it easier to see if people have paid the wrong amount of tax.

The NPS is a single, national computer system, bringing together the former National Insurance Recording System (NIRS) and elements of the Computerisation of PAYE (COP) databases.

“Under the previous PAYE IT system all cases that did not reconcile as balanced needed to be worked clerically one by one,” a HMRC spokesperson told FST. “The new NPS IT system allows HMRC to automate that process for most customers, ensuring that more people are paying the right tax and getting things right for the future to prevent under or over payments arising in later years. It does this by creating a single taxpayer record which draws together all the relevant data around the individual customer on one database,” which the HMRC said was previously spread across up to 12 databases.

HMRC is beginning its End of Year Reconciliation process, which covers the past two tax years, 2008/09 and 2009/10.

The spokesperson said HMRC will start with a small number of cases, expected to produce calculations to around 45,000 customers. Only those customers who have over or underpaid will receive a calculation.

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