Lack of care

The taxpayer who had taken early retirement was employed in 2003 by D as an agency driver. The company correctly used code BR on the taxpayer’s earnings.

He left D in 2005 but returned after a few months. Initially D continued to use the BR code but changed it to 503L at the start of start of 2006/07.

HMRC issued a notice of coding in May 2006 showing code BR but this was not operated by D. The result was that the taxpayer underpaid tax for 2006/07 and 2007/08.

The company said it had installed a new payroll system around the time of the code error.

The Revenue accepted the firm had taken reasonable care to deduct the correct amounts but had made an error due to a lack of familiarity with a new system.

The department issued a direction under Income...