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HMRC say they are aware of a tax error affecting recipients of disbursement from the Redundancy Payments Office (RPO) but will not make corrections unless asked to do so.
The RPO provides financial settlements to staff members of insolvent employers but does not operate a tax code on the payments, meaning only basic rate tax is deducted and workers often find they have paid tax excessively or erroneously.
HMRC say they are aware of a tax error affecting recipients of disbursement from the Redundancy Payments Office (RPO) but will not make corrections unless asked to do so.
The RPO provides financial settlements to staff members of insolvent employers but does not operate a tax code on the payments, meaning only basic rate tax is deducted and workers often find they have paid tax excessively or erroneously.
The Low Incomes Tax Reform Group, a charity, warned that Revenue systems are unable to identify an RPO package that is exempt in whole or in part and so treat the full payment as taxable,
The department says it has guidance in place on how to correct tax calculations that include payments with a non-taxable element from the RPO or its operating body, the Insolvency Service, but officials will act only when instructed by affected taxpayers.
