Warning: Ian Selwood - accountant for Spa-Kling Pool Company, Leckhampton and Chris Bartlett - joint owner of Spa-Kling Pool Company

Ian Selwood, a partner at Randall&Payne who heads the accountants’ Cheltenham office, started to investigate after uncovering a discrepancy that had left one of his clients out of pocket after overpayment of tax.

Under the Freedom of Information Act Mr Selwood asked HM Revenue and Customs (HMRC) how much money was still sitting in employer credit balances (including overpayments) for each of the last six tax years.

He was told that it varied from £778.7 million in 2005 to £1.8 billion in 2010. It means the total amount standing to the credit of employers in September 2010 from the last six tax years was over £4.6 billion.

Mr Selwood is especially concerned that it appears employers are not always being informed when they are owed credit by HMRC.

He began making his inquiries after Randall&Payne were asked to handle the accounts of The Spa-kling Pool Company Ltd in Leckhampton, Cheltenham.

When researching his new client’s tax affairs, Mr Selwood realised that they may be entitled to a substantial repayment of tax and submitted the annual form P35 in May 2010 showing that repayment was due to the company.

“I told the clients that they were due a repayment of tax of nearly £8,000 and that they should receive some acknowledgement of this in the near future,” said Mr Selwood.

“They received no such acknowledgement and we called HMRC to find out what was happening.”

HMRC told them to write in with a brief explanation and the tax overpayment was eventually paid to the company on October 19.

Mr Selwood said he was surprised at the large amounts of employer credit balances still outstanding for earlier tax years.

“It should be possible for HMRC to write to employers and their agents summarising under and overpayments by tax year so that the employer has a chance of recovering any overpayments,” he said.

Chris Bartlett, co-owner of The Spa-kling Pool company, said he was surprised that HMRC had not contacted his company to explain there had been an overpayment.

“That never happened. They never made contact and said we had overpaid. It was five months before we got the money back.”

Lisa Billard of HM Revenue & Customs (HMRC) said the figures were a “snapshot”, adding: “The figures show credit balances for employer accounts on a particular day. They are definitely not a total of monies overpaid by employers. Research shows that only one per cent of these credits annually are repaid to employers.”

She said HMRC and UK employers process around £122 billion of PAYE on behalf of over 30 million employees and pensioners each year.

“Naturally we have to check any inaccuracies in the information submitted to us by employers. Common errors are incorrect references entered on a payslip, the payment period not being included on a payslip, an incomplete employer return submitted and more information required.

“Once we receive the correct information from employers (through the submission of additional returns or amended returns) analysis shows that 63 per cent of balances are cleared for the appropriate year. Six per cent of monies are allocated to other tax years or other tax areas, with only one per cent needing to be repaid to employers.

“The remaining 30 per cent balance consists of various matters, including where employers fail to respond to our inquiries – so monies cannot be allocated correctly until we have a response.”

She maintained that employers were contacted over credits they were due.

“We are unable to comment on individual cases, but employers or their agents should contact HMRC’s PAYE employer helpline on 08457 143 143 with any questions,” she said.

If you think you are owed some of this money, please call Ian Selwood 01242 548600
You never know!