If you have been unlucky enough to be dragged through a thicket of threats, intimidation and stonewalling that can turn a difference of opinion with the tax authorities into an inquisition, take heart.

The latest report from the Commons public accounts committee, entitled HM Revenue & Customs: Tax Credits and Income Tax, may not be the first volume you’ll pack to read on the beach this summer, but its restrained language hints at a seething undercurrent worthy of a bestselling crime novel. It also contains handy hints on how to survive.

Gordon Brown called the tax-credit system “the modern route to eradicate poverty”, but it has turned into a gothic horror story. Millions of innocent people either do not claim what they are entitled to, or fear what they have been given will be clawed back because many tax offices base payouts on guesswork.

The committee says that HM Revenue & Customs (HMRC) has not given people the support they need in making claims and reporting changes in circumstances, largely because it cannot imagine how chaotic life can be beyond Whitehall’s cloistered calm.

As the report puts it: “Claimants faced with household breakdown are unlikely to give their highest priority to contacting HMRC about tax credits, and HMRC has failed to appreciate the variety and frequency of changes in claimants’ circumstances.”

The position regarding income tax is no better. Latest estimates suggest that more than 16m pay-as-you-earn cases await clerical checking, and a third of self-assessment returns are inaccurate.

Faced with contradictory letters from tax offices, the committee has found, unsurprisingly, widespread “anguish and irritation” among the public.

The lessons are clear, though. As error and delay are endemic, you can confidently assume that whatever your tax office tells you is wide of the mark. Be prepared to challenge any decision that doesn’t seem right, especially as HMRC will acquire tough new powers on Wednesday.

If you lose your job or become unable to work, make sure you receive your entitlement. And put to one side a healthy proportion of whatever you receive from HMRC, as there is a strong chance it will try to grab it back.

Pride and prejudice

LEWIS CARROLL, George Orwell and Jane Austen came under the hammer at Bonhams, the saleroom, last week, achieving prices that show investors want alternatives to equities.

The big debate over shares is whether the past 18 months have been a blip or something more. Those proclaiming that a bull market has begun are clearly in the blip camp, while the rest of us are keeping our options open.

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