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Bankrupted for 88p: Taxman's blunder leaves former cab driver facing repossession
Last updated at 00:22am on 11.03.08
Life turned upside down: Matt Matharu was a company director but now drives cabs to make ends meet
For former cab driver Matt Matharu, life was looking good. At 53, he was earning almost £50,000 as a director of a graphic design company.
His wife, Kate, and their two children, who still lived with them, all had full-time jobs.
Then the bombshell dropped through the letter box that led to him losing his job, risking having his house repossessed and unable even to pay for the weekly shop.
Not only did the Inland Revenue claim Mr Matharu owed £12,000 in tax, but a court date had been set to make him bankrupt.
It was only when the family were deep in debt that the Revenue admitted it had made a mistake.
It said Mr Matharu owed a mere 88p tax for the year 2003/04 and was actually owed rebates of £370 from three other tax years.
"The Inland Revenue bankrupted me for just 88p," he said.
"My life was turned upside down and my family almost ended up homeless because of their total and utter incompetence."
During his time as a self-employed cabbie, Mr Matharu, from Beltinge, Kent, had always filed tax returns and paid on time.
And after he joined the design company in 2000, his income tax was deducted automatically through the PAYE system.
When the bombshell tax letter arrived, he and his wife believed the "misunderstanding" would be swiftly sorted out.
They sent off files of documents to prove his case. Yet the message failed to register.
Two months later - in August last year - Mr Matharu was declared bankrupt by a High Court judge in London.
He had not even attended the hearing, having been told it would be adjourned as a matter of routine to give him time to challenge the order.
In the weeks that followed, the couple's joint bank account was frozen, their mortgage company took out a possession order on their house and Mr Matharu was forced to quit his job because bankrupts cannot be company directors.
"You just keep hoping and hoping that someone is going to listen, look at the paperwork you've supplied them, press a button on a computer," he told ITV's Tonight show.
"It's the age of the computer, you know Big Brother knows everything about us, so why doesn't he know about my tax affairs?"
With the £12,000 tax bill lifted, Mr Matharu had the bankruptcy order overturned at another court hearing in January.
But even now, the family's problems are far from over.
The Matharus face another court hearing this month to decide if they should pay the £2,000 Official Receiver's costs for administering the bankruptcy.
Mrs Matharu, 46, a computer software technician, said they had already offered to pay another £750 costs bill "to get it out the way" and the family was now £15,000 in debt because of the tax blunder.
Her husband has had to return to taxi driving, knowing their house could be repossessed at any time if they fail to keep up with monthly payments.
To complicate things further, Mrs Matharu is being threatened with the bailiffs for a "self-assessment" tax demand of £1,900.
She insists this is another blunder, as her tax is deducted from her salary.
She says the stress caused her to be admitted to hospital with heart problems in September.
Describing the family's financial position following the annulment of the bankruptcy order, she said: "It's like saying, 'You've had an earthquake – don't worry about the damage it has left behind, the earthquake has stopped now'.
"Well it's not like that. It has left a huge wake of damage behind us and we are really struggling.
"It almost finished us. But we're quite practical people and we have looked for a solution, but anybody of lesser character, it could have quite easily finished them off, I think."
Mr Matharu has never received an apology from the Inland Revenue.
It said: "Mr Matharu should have completed a self-assessment return.
"However, we did not explain to him why it was necessary for him to do this.
"We apologise for this and also not identifying that he had paid tax at source under his PAYE record."
Matthew Elliot, of the Taxpayers' Alliance, said: "In a court of law, people are seen to be innocent until proven guilty, but with the tax authorities they are guilty until proven innocent.
"You can supply all the evidence that you've got all your salary slips, your chequebooks, literally everything, but the taxman still comes after you."
■ The Taxman Cometh is tonight at 8pm on ITV1.
Reader views (4)
I'm with Neil on this one - let's all stop paying tax! Not too sure who will pay the police or teachers or doctors and nurses but I am sure that these are just minor quibbles in Neil's otherwise fine plan!
- Turbut, London, UK
This couple need serious compensation for this incompetence.
The tax office is on the most part very helpful, but you HAVE to check their calculations. I see employees getting three different tax codes within days of each other quite often and I have to wonder whether either the tax office need their computers updating, or the people typing in the information are not doing their job properly.
- Smb, UK
Most of the tax office workers that I have had to deal with are lazy, half-witted idiots. They don't care. They are like the Little Britain sketch - "compu'er says no". But they are destroying the lives of British people. It is about time these incompetents were thrown on the dole queue and quick.
- Anthony, London,
Tax is theft. When we all simultaneously stop paying, we can destroy this evil system. Tax only pays for war and for the interest on the national debt.
- Neil, london uk
