A mix-up by the Inland Revenue has led to letters incorrectly seeking extra National Insurance payments being sent out to thousands of people.

Revenue & Customs last night admitted it had a problem but was unable to say how many people had been wrongly targeted - though it could be at least 700,000.

An official telephone helpline has been set up to help those worried by the letters, which relate to the tax year 2004-2005.

Keith Parry, a worker at Tameside Borough Council in Greater Manchester, said he had received a letter inviting him to reinstate his pension entitlement by paying £371.80.

He said: 'I was rather alarmed when I received it because I realised obviously that I had been in continuous employment with the same employer for the past 26 years. There was certainly no reason at all why those contributions wouldn't have been recorded.'

Karen Thomson, research director at the Institute for Payroll Professionals, said normally some fourm letters were sent out inviting extra payments to make up a shortfall in pension provision, due to missing payments.

As 4.7m had been sent this year, it suggested that 700,000 could potentially have been wrongly despatched, she said.

She added: 'We believe that it's affecting the public sector the most. However, there are some large private-sector employers who have reported similar problems.'

A spokeswoman for Revenue & Customs said last night: 'We do not know how many people have been affected. There is not one geographical area or one sector which is affected.

'The notice advises people they may have a deficiency in National Insurance contributions. The notice is certainly not a demand for payment.

'The problem has arisen because not all the annual National Insurance returns have been processed or there have been errors on the forms submitted by employers. As a result a default letter has been sent out.

'We can confirm that no one will lose out financially as a result.'

The helpline number is 08459 155 996.

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Rhodri Phillips

© 2006 Associated Northcliffe Digital Ltd