Millions of people face having to hand money back to HMRC after errors meant they ended up paying the wrong amount of tax on their earnings.
It is estimated that 5.5 million people have paid the wrong amount of tax, with 3.5 million thought to have paid too little and the remaining 2 million having overpaid, meaning they can claim a refund.
The mistakes can occur due to a change in personal circumstances, such as if a person moves jobs or starts receiving benefits.
According to tax officials cited by the Daily Telegraph, the average size of the error is about £300.
This is despite the introduction of a new £270 million 'Real Time Payments' scheme designed to make the tax system more accurate by letting people update their information on a weekly or monthly basis.
Mike Down, of accountancy firm Baker Tilly, said the HM Revenue & Customs (HMRC) should be checking tax returns to see whether individuals had already explained their circumstances.
He told the Daily Telegraph that The Revenue is "adopting a computer says yes approach, rather than simply checking the tax returns".
One case involved an elderly widow whose effective tax rate was low because she was giving more than half her income to charity.
The HM Revenue & Customs who have been accused of "bully boy tactics" for sending high earners letters ask why they are not paying more tax, have responded to the claims.
An HMRC spokeswoman said:
We are issuing 1,000 letters to taxpayers with an income of £150,000 or more who have an effective rate of tax of 22% or less.
If a taxpayer is content that their return is accurate then they do not need to do anything.
This is part of a trial to help individuals identify any mistakes they may have made on their Self Assessment return.
Anyone who needs help is welcome to get in touch with us.
The HM Revenue & Customs has been accused of "bully boy tactics" for sending high earners letters asking why they are not paying more tax.
Around 1,000 letters have been issued to people who have an income of more than £150,000 but are paying less than 22% in tax.
The letters state: "We can see from your Self Assessment tax return... that your effective rate of tax is lower than the average for people in your income bracket.
"There may be reasons why your effective rate of tax is correct. But it could mean that there is something wrong with your self assessment."
HM Revenue and Customs remains committed to safeguarding taxpayer confidentiality, a spokesman has said, after reported plans to share taxpayers' data with third parties.
An HMRC spokesman said: "No final decisions have been taken [...] HMRC would only share data where this would generate clear public benefits, and where there are robust safeguards in place.
"Those accessing data would be subject to the same confidentiality provisions as HMRC staff, including a criminal sanction for unlawful disclosure of taxpayer information.
"HMRC will be consulting further and will ask for views on whether to charge to cover the costs of processing and providing anonymised data. This would not be charging for the data itself, purely covering the costs of providing it."
The deputy director of Big Brother Watch has condemned reported plans for HM Revenue and Customs to share taxpayers' data with private firms. Emma Carr said:
Given the huge uproar about similar plans for medical records, you would have hoped HRMC would have learned that trying to sneak plans like this under the radar is not the way to build trust or develop good policy.
Given those who abuse personal information cannot be sent to jail this is yet another instance where Government should be putting proper protections in place before any more data is shared, rather than just hoping nothing goes wrong.
Given the sensitivity of people's financial records that is clearly an inadequate and dangerous approach to take.
Conservative former minister David Davis has described a Government proposal to share taxpayers' data with private firms as "borderline insane".
Speaking to the Guardian: "The officials who drew this up clearly have no idea of the risks to data in an electronic age."
"Our forefathers put these checks and balances in place when the information was kept in cardboard files, and data was therefore difficult to appropriate and misuse", Mr Davis.
"It defies logic that we would remove those restraints at a time when data can be collected by the gigabyte, processed in milliseconds and transported around the world almost instantaneously."
Government plans to share taxpayers' data with private firms were condemned as "borderline insane" by a senior Tory MP.
Under the proposals, HM Revenue and Customs would be allowed to release anonymised information to third parties including companies, researchers and public bodies where there is a public benefit.
The Guardian reported that HMRC documents said "charging options" were being examined by officials, indicating that firms could pay to access the data. Treasury minister David Gauke is overseeing the plan, with legislation being drawn up by HMRC, the newspaper reported.
In its response to a consultation on the proposals last year, HMRC insisted the principle of "taxpayer confidentiality" would be protected under the reforms.
The tax office may have to pay back billions of pounds' worth of refunds to taxpayers after it lost a High Court case against retailer Littlewoods in a landmark ruling today, a lawyer has said.
HM Revenue and Customs has been ordered to pay Littlewoods £1.2 billion after the company overpaid VAT between 1973 and 2004.
Lawyer Giles Salmonds said the ruling by Mr Justice Henderson could have significant implications because it takes into account the interest's increased - or compounded - value over the years.
"Littlewoods claimed that based on principles of EU law they were entitled to the compounded use value of money they had paid to HMRC as VAT," said Salmonds.
"Today's judgment means that HMRC will be liable to pay billions in interest to other taxpayers who have already claimed overpaid VAT going back to the early 70s, but have only been paid simple interest based on a reduced average of bank base rates."
He added: "This is an important victory for taxpayers, but it is very likely that HMRC will seek permission to appeal to the Court of Appeal."
George Osborne said the Government's latest clampdown on tax evasion`would make it very clear to people that if they do not pay their taxes then "we are coming after them".
The Chancellor said, "It is not fair for people to do that, it means that other people have to pay higher taxes and ultimately, as a society, we've all got to make a contribution."