Examines the accuracy of the Department of HM Revenue and Customs in processing Self Assessment Tax forms and the 'Pay As You Earn' (PAYE) scheme for Income Tax. This National Audit Office report concludes that correct tax assessment occurs in 95.4 per cent of cases.

Taking all the various processing errors together, just over one million taxpayers in this period had received GBP 125 million in underpayments of tax and GBP 157 million in overpayments. The most frequent type of error is in the Department's calculation of tax codes, which are used by employers to calculate deductions of income tax from employees' pay, with 63 per cent of the PAYE error rate relating to tax codes.The report recommends that HM Customs & Revenue should: continue with the quality monitoring, identifying specific types of error; facilitate the sharing of good practice across the tax offices; further develop an early warning system, through the analysis of trends in monthly data; and separate out more complex cases to be processed by specialised teams and develop a customer-focused approach by tracking the effect of error rates on the different taxpayer groups.