Around 460,000 people chased HMRC for refunds on overpaid income tax in the year 2018/19, according to an FOI request by Royal London.
Among the reasons HMRC gives for overcharging people income tax are that the taxpayer may have changed jobs in the year or be subject to changes to taxable benefits, which might result in an overpayment of tax. The value of all types of repayments to individuals in 2018/19 was £5.1bn, up from £5.0bn in 2017/18, made up of refunds to individuals and for personal pension contributions.
Individual taxpayers were refunded £2.78bn, down from the previous year's £3.1bn, while pension refunds jumped to £2.24bn, up 10% from £1.9bn.
This goes to show it's a good idea not to assume the taxman is always right about what he says you owe"
Becky O'Connor, personal finance specialist at Royal London, notes: "Nearly half a million people tried to get overpaid income tax back from HMRC in the last tax year. This goes to show it's a good idea not to assume the taxman is always right about what he says you owe."
She added that clients should always check their tax statement for the year and keep a note of any unusual changes to income that might indicate an overpayment.
There has also been a drop in the number of agreements that give taxpayers immunity from prosecution for tax evasion in exchange for paying back tax and penalties. Data from the international law firm Pinsent Masons shows overall, last year HMRC offered 438 taxpayers the opportunity to make a deal to gain immunity from prosecution for tax fraud in exchange for paying back taxes and penalties, figures obtained through freedom of information requests show. This is down from 486 in the previous tax year.
Pinsent Masons says the fall in agreements raises concerns that HMRC is becoming increasingly reluctant to let tax evaders come forward and pay up.
Steven Porter, partner at Pinsent Masons, said: "HMRC has a growing stack of individuals that it is confident it can prosecute. That means it is less enthusiastic, or even willing to offer plea bargain agreements.
He added: "Its new investigatory powers and the reams of data that HMRC gets from private banks, from lettings agents, from the Land Registry, from accountants, means it is not short of leads.Plea bargain agreements have become increasingly popular with taxpayers in recent years. In the past, only those with very large tax exposures used these agreements, but now those who owe much smaller sums are applying for them."