Approximately 3.5 million people will be notified they have overpaid their tax, with the average rebate being £379.

On top of this 1.6 million people will be in the less fortunate position of being about to be informed they have paid too little tax. The average underpayment will be £537.

Most of the underpayments will be collected by adjusting tax codes, meaning take home pay will be reduced.

The number of people who have not paid the correct amount of tax is slightly up on last year. This is in spite of steps taken to reduce the amount of coding errors there has been in the past.

HMRC has said that that moving jobs frequently and people having more than one source of income are two of the major reasons for the disparities.

Robert Oxley, the campaign manager for TaxPayers Alliance said that the taxman “was giving with one hand and taking with the other because of an overly complex and burdensome tax system that can’t keep up with peoples’ changing circumstances”.
He added: “We urgently need a simpler, fairer system that leaves everyone with more cash in their own pockets to spend as they choose.”

Exchequer secretary David Gauke said that HMRC did not have a target time for answering telephone calls.

He added:” HMRC uses a variety of measures to assess the accessibility of telephone services, which include the percentage of call attempts handled by its contact centres.”

“In 2011/12, HMRC has significantly improved the number of call attempts handled to 74% (compared to the 48% in the previous year).”

0845 numbers at HMRC are automatically answered by a recorded voice message which causes callers to be charged. Often a number of options are given, with customers being placed on hold frequently, which often causes frustration and calls to be ended.

The Office for National Statistics (ONS) said the contraction was caused by a sharp fall in construction output.

BBC economics editor Stephanie Flanders said: “adds to the picture that the economy is bumping along the bottom.”

Prime Minister David Cameron said called the figures “very, very disappointing.”

He said: “I don’t seek to excuse them, I don’t seek to try to explain them away,” he said at Prime Minister’s Questions.
“There is no complacency at all in this government in dealing with what is a very tough situation, which frankly has just got tougher.”

The ONS said that government spending cuts were heavily contributing to a decrease in construction.

“The huge cuts to public spending – 25% in public sector housing and 24% in public non-housing and with a further 10% cuts to both anticipated for 2013 – have left a hole too big for other sectors to fill,” said Judy Lowe, deputy chairman of industry body CITB-ConstructionSkills, said.

But the bulk of thought is that there will be insufficient improvement in the UK economy to enable interest rate increases in the immediate future.

Chief Economist at Nationwide building society said: “The Bank of England will want to make sure the economy is really gaining momentum before it risks raising interest rates.”

He also said that there was too much volatility in economic data to all allow the Bank of England to accurately gauge the strength of the economy. This volatility is likely to be exacerbated this year by the diamond jubilee and the summer Olympics in London.

Director of Saga Ros Altman said: “Low rates were supposed to stimulate the economy by boosting bank lending, but borrowers have not benefited that much. Overdraft and many credit card interest rates are at record highs, while small company lending has declined.”

The findings show that nearly 1,000 British taxpayers who earn over £1 million per year are paying less than 30 percent of their income in tax.

It was also revealed that there are 12 taxpayers earning over £10 million per year who are paying less than 10 percent in tax.

This is the first time that such comprehensive figures regarding the UK’s wealthy have been publicised by the Treasury.

A Treasury spokesperson said: “There are currently millionaires paying a lower rate than ordinary taxpayers. This is the system we have at the moment, but the government is committed to making it fairer.

“We’re capping benefits and these figures clearly show why it’s fair to cap tax reliefs for the wealthy as well.”

One of the main changes will be the increase in the personal tax threshold from £7,745 to £8,105 per year; an increase of £630 of how much money people can earn each year without paying any tax.

Maternity pay and some benefits including job seeker allowance will rise in line with inflation to 5.2 percent.

Some of the changes though have been criticised by unions and opposition parties, particularly the freezing of child benefits and moves which will make parents have to work a minimum of 24 hours a week to qualify for working tax credits.

Other changes include the personal allowance for 65 to 74 year olds is to rise from £9940 to £10,500 and the lifetime allowance for pensions will reduce to £1.5 million from £1.8 million.

Recruitment firm Manpower, who conducted the research, said the survey’s findings showed that businesses were encouraged by the prospects for economic growth.

Managing director Mark Cahill said: “It does feel like we’re turning a corner when it comes to the jobs market.”

“Businesses that were battening down the hatches in the last quarter appear to be considering taking on staff. We’ve noticed much more flexibility among employers, particularly in the market for permanent hiring.”

Meanwhile the Bank of England governor Sir Mervyn King said he expected that the UK economy will avoid a double dip recession and that some businesses had experienced improved performance at the beginning of the year.

A survey of nearly 100 accountancy firms has discovered that almost 80 percent of tax advisors favour a general disclosure facility for people to declare unpaid tax from the past.

HMRC has previously introduced targeted campaigns aimed at specific industries, such as plumbing and the medical profession, encouraging people to declare undeclared income by liming their liabilities to fine and penalties.

The advisors who were questioned overwhelmingly backed an all encompassing amnesty that would be open to all of their clients.

Three of the main features of the amnesty the advisors would like are a guaranteed immunity from prosecution, a low fixed penalty rate and the facility for a time to pay agreement.

Sean Wakeman of Crowe, Clark Whitehill, who conducted the survey said: This survey indicates that accountants overwhelmingly believe the time is right to introduce a general domestic tax amnesty and are extremely willing to promote such an amnesty to all of their clients in stark contrast to how they have promoted the LDF. This survey also indicates that a Helpline Service should be set up to support the introduction of a GDF.”

The OTS made the suggestion in a report that criticised “confusing” and over complex tax rules that retired people faced.

Whilst public pensions are not taxed at source, they become taxable when added to other income, typically when added to private pensions and bank interest.

The report to Treasury Ministers said that taxing the state pension made the tax system for the elderly considerably more complicated.

It is thought that the majority of retired people do not know that the state pension is subjected to tax in the way that normal income is.

The report said: “Many of those who do understand that it is taxable feel that this is unjust, given that they have contributed through the national insurance system through their working life,” Among the options identified by the OTS was: “Exempt the state pension from tax altogether.”

An assurance commissioner will be appointed and will be responsible for protecting the interests of the taxpayer by overlooking all large settlements.

For cases where more than £100 million is at risk to the public purse, tax professionals will be involved, in the shape of three commissioners.

An annual report of HMRC’s work will be published and all tax disputes while a new code of governance will oversee tax disputes.

Treasury Minister David Gauke MP said: “I welcome HMRC’s new governance arrangements, which will ensure a clearer separation between those who attempt to reach settlements and the commissioners who consider them.
“Settlements form an important part of HMRC’s large business strategy. This internationally recognised approach has not only led to an increase in tax collected in recent years, it is contributing to the government’s drive to make the UK more competitive in a global market. This will continue to be vitally important as we work to rebuild our economy.”