Revenue denies tax code error claim

HMRC have refuted an allegation that difficulties with their new PAYE system have led to errors in a 'significant proportion' of tax code updates being incorrect.

The Revenue’s was responding to a claim by the Chartered Institution of Taxation that ‘wrong information is being sent out to huge numbers of people’. The organisation called on the taxman ‘to be proactive and mount a publicity campaign to highlight’ the alleged problem with new P2 notices.

HMRC will be sending out around 25 million tax coding letters this year, which is approximately double the number issued in 2009. ‘It is clear that a significant proportion of these are wrong,’ said the CIOT.

President Andrew Hubbard remarked that a large number of people on PAYE ‘file away coding notices without even bothering to check them’, but this year ‘many of them are being given wrong information, and unless they spot it and tell HMRC their employer will receive the wrong information, too.

‘They could get a nasty shock when they open their April pay packet and see it is as much as a hundred pounds lighter than they are expecting.’

Mr Hubbard urged HMRC to ‘launch a publicity campaign to highlight what has happened and tell people what they can do about it. [Tax authorities] also need to add a specific warning about it to the majority of P2 notices… which have still to go out.’

The Revenue denied such a measure was necessary and said that, while it expects expect some codes to be incorrect, the new National Insurance and PAYE system ‘is working as it should’.

‘It creates a single record for customers for the first time,’ said a department spokesperson. ‘This, together with increased automation compared to previous years, is resulting in many more people having more accurate codes than before.’

He acknowledged that 'there will be cases when some people receive an incorrect coding notice or more than one coding notice for the same employment in a short time, because there is a discrepancy with what we hold on our records’.

Taxpayers who find themselves in this position are advised to check their code using the guidance included with the notice and on the income tax section of the HMRC website.

Issue: 4241 / Categories: News , Admin , Employees , Income Tax