HMRC is facing serious criticism after several UK taxpayers were issued demands for thousands of pounds in unpaid tax—based on interest they say they never received. As reported by the Birmingham Mail, one such case involved a retiree whose tax code was altered, slashing their monthly pension income by £500, all due to a reported £14,000 in savings interest that didn’t exist.
Tax Bills Triggered by Non-Existent Savings Accounts
The affected individual explained their situation in a letter to This is Money’s Tony Hetherington, writing:
“HM Revenue & Customs informed me that I had paid too little tax in 2022-2023, because I had received over £14,000 in untaxed interest on savings. The savings figure was supplied to HMRC by National Savings. Unfortunately, I have no such account or interest. It is fictional.”
Despite the absence of any such savings account, HMRC informed the taxpayer that their Pay As You Earn (PAYE) tax code for their work pension would be changed. This adjustment, based on an error, reduced their pension by approximately a third.
The taxpayer added:
“I contacted the tax office, but now I have been told the Pay As You Earn tax code for my work pension is being changed, leaving me worse off by about £500 a month.”
HMRC Responds After Media Intervention
Tony Hetherington, who investigated the case, noted how quickly things escalated from confusion to financial strain:
“Your first inkling that anything was wrong came when you received a demand for £2,751, which was said to be tax due on interest of £14,750.”
He explained that HMRC relied on figures supplied by National Savings & Investments (NS&I), which were not verified by the taxpayer, who was unable to provide any account number—because no such account ever existed.
“All the taxman could tell you was that the figure had been supplied by National Savings, but officials there were no help either, as you could not give them the account number of the account you did not have in the first place,” Hetherington added.
Even though HMRC staff told the individual they would not lose out “in the long run” if NS&I’s data proved to be wrong, the consequences were immediate.
“Staff assured you that you would not lose out in the long run if the tip-off from NS&I turned out to be wrong. But this is little comfort when you are losing such a huge slice of your pension for no reason.”
Final Outcome After Complaint
After Hetherington personally contacted HMRC, they responded quickly. Within three days, the taxpayer received a call from HMRC offering an apology, £75 in compensation, and the restoration of their previous tax code.
“I asked HMRC to look into this and they moved with commendable speed. Three days after I contacted them, you received a call from the tax office, apologising and offering £75 compensation, as well as issuing you with a new PAYE code.”
The initial £2,751 bill was replaced by a corrected balance: just £1.80.
