It has been revealed that HMRC failed to identify 45 MSPs as Scottish taxpayers. Almost a third of Holyrood’s 129 members were issued with an incorrect tax code for 2019 and 2020, Jim Harra, the deputy chief executive of HMRC said.
Addressing Holyrood’s Public Audit Committee facing MSPs he told them of the mishap, Jenny Marra told Harra she was one of those affected.
Harra said, “We identified 45 MSPs where we had sent them an incorrect 19-20 code which did not identify them as a Scottish taxpayer.
“That was because of a clerical error in the tax office that looks after the affairs of Scottish parliamentarians.”
Marra pressed him over the issue and said, “We’re not asking these questions because we’re concerned about our own tax affairs, we’re concerned about it because it is a very small group of people.
“For such a significant clerical error to happen with such a small group when there is a special process in place, that is the thing that really worries me about the confidence in the wider system.”
However, Harra said he is “satisfied” this is an isolated case. He said, “There is a special clerical process that applies to parliamentarians and that is what went wrong.
“The process for the main bulk of the population is an automated one, based on the address.”
He also told MSPs at the committee HMRC also corrected around 30,000 self-assessments tax returns due to people failing to identify themselves as Scottish taxpayers.
Conceding that “the error rate is too high.”
Harra added, “We quickly learned the level of error in returns was such that it was actually better to calculate the level of tax based on what we knew from our own database.
“The entries on the self-assessment tax returns, our experience is they are not the best indicator of whether someone is a Scottish taxpayer because the error rate in them is higher than they would like.
“We are going to have to continue improving the accuracy of what taxpayers put on those returns and in the meantime, we have taken the decision not to rely on what people put on those returns.”