HM Revenue and Customs: Dealing with the tax obligations of older people - Public Accounts Committee Contents

Conclusions and recommendations

1.  The Department's systems for dealing with older people's tax affairs are too complex, create uncertainty for older people, and result in too many overpaying tax. The Department should establish a clear plan by June 2010 to guide its approach, making it simpler for older people to fulfil their obligations and reducing the level of error in their tax. This should include accurate information on the needs of older people; and a clear explanation of what the Department and other agencies should do to meet these needs.

2.  The Department does not know the costs it incurs, how effective it is in meeting the needs of older people, or the likely impact of future growth in the numbers of older people. The Department should track the costs of helping older people with their tax affairs, the quality of service it provides and their take-up of allowances. It should estimate the likely impact of the forecast growth in older people, and decide how it will provide effective support for older people as the number of older people increases.

3.  The age-related allowances are intended to help people financially in later life but the Department does not know for certain how many people are eligible for the allowances but do not receive them. The Department should establish accurately how many older people have not claimed the age-related allowances, Blind Person's Allowance and the Married Couple's Allowance but are eligible to do so, and identify the steps it will take to ensure they receive the allowances due to them.

4.  The age-related allowance rules are complex and hard for older people to understand and place too much emphasis on older people having to prove their eligibility, resulting in errors in claims and potential overpayments of tax. The Department should reduce the effort required by older people:

a)  by agreeing with the Department for Work and Pensions and other agencies what information the Department could use to identify who is eligible for an allowance;

b)  by awarding the allowances automatically without the need for a claim in those cases where the information available indicates an individual's eligibility, and

c)  where claims are required, by making the process easier to complete, such as by allowing claims to be made by e-mail or with assistance from the Department's staff.

5.  Many older people with multiple income sources have to cope with several tax coding notices which they find hard to check and which creates costs for the Department in dealing with associated enquiries. Once the rollout of the new PAYE system is complete in 2010 the Department should provide people with a single document which explains clearly how their tax code is calculated and how tax will be deducted from each income source.

6.  The planned one-stop shop drawing together online, telephone and face-to-face support across Government and the third sector offers an opportunity for the Department to improve the access older people have to information and help in managing their tax affairs. The Department should decide with the Department for Work and Pensions, as a matter of urgency, what tax information will be provided for older people through the one-stop shop and ensure that they will have access to this information as soon as the initiative is launched.

7.  The Department recognises that working with third sector organisations is a cost-effective way of helping older people to get their tax right, but it is not yet making the most of such organisations in helping it to contact hard-to-reach older people. The Department should:

a)  identify the types of support which third sector organisations are best placed to provide to older people and how it can maximise that contribution, and

b)  target its funding accordingly, providing a commitment to long term funding where this would help third sector providers develop a more sustainable and cost-effective service.

8.  In pursuing efficiency savings, the Department should not put at risk the access to face-to-face contact that older people and other vulnerable groups need, which is currently provided through its enquiry centres. The Department should talk to other organisations to identify how the needs and preferences of older people can be met most cost-effectively. It should recognise that older people often place great value on face-to-face contact and safeguard the opportunities for this when deciding on what access people have to enquiry centres in different parts of the country.

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Prepared 25 February 2010