§ Sir Albert Costainasked the Chancellor of the Exchequer whether there has been any further review of the income limits which govern the Inland Revenue's practice for remitting arrears of tax which have arisen through official error.
§ Mr. RidleyYes. The practice adopted by the Inland Revenue towards remitting arrears of tax which have arisen through official error is set out in a White Paper of 291W July 1971—Cmnd 4729. Under it the proportion of the arrears which the Inland Revenue will collect varies with the size of the taxpayer's gross income; the balance of the arrear is remitted. The scale has been revised several times since 1971; the scale generally applicable at present was introduced in March 1981, as follows:
Fraction of arrears Gross Income Collected Remitted Not above £6,000 None All Above £6,000 but not above £8,000 ¼ ¾ Above £8.000 but not above £10.000 ½ ½ Above £10,000 but not above £12,500 ¾ ¼ Above £12,500 but not above £17,500 9/10 1/10 Above £17,500 All None In the case of taxpayers aged 65 or over or who are in receipt of a national retirement or a widow's pension however each of the above income limits is £2,000 greater.
It has been decided to increase these limits. The new limits will apply to arrears of tax, the actual or likely amount of which is first notified to the taxpayer or his agent on or after today. The date of notification will also be the date for testing eligibility for the higher limits applicable to pensioners and so on. The scale generally applicable will be:
Fraction of arrears Gross Income Collected Remitted Not above £7,000 None All Above £7,000 but not above £9,000 ¼ ¾
Year ended 31 October 1976 1977 1978 1979 1980 1981 Number of settlements 13,561 29,426 50,719 52,949 53,335 55,254 Yield £ million 23.2 48.5 70.8 91.5 116.9 143.6 Interest and penalties included in total 7.3 13.5 19.0 25.5 32.3 39.8