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But tax experts blame Revenue’s systems
HMRC say they are investigating the reasons why they issued incorrect 2013/14 P800 tax calculations and payable orders to unknown thousands of PAYE taxpayers.
The department has laid blame on employers following a bulk end-of-year reconciliation exercise that saw erroneous information sent over a three-week period starting on 15 September. But tax experts claim deficiencies of the Revenue’s systems were at least partially responsible.
Incorrect overpayments and underpayments were show where pay and tax shown does not match that shown on 2013/14 P60, said the Revenue. “We currently do not know the scale of the issue, but some large employers are involved, so several thousands of employees may be affected.”
A tax department spokesperson added, “No action was taken until very late in the processing of reconciliation cases to give employers the maximum opportunity to provide information. We then carried out assurance checks that led us to believe no further submission was due, which meant the cases could be reconciled and taxpayers could be sent a calculation.
“The vast majority of P800 calculations are correct becasue the vast majority of employers get PAYE right. We will learn from this years’ experience to ensure that this does not happen again.”
Steve Wade, UK tax director at KPMG, claimed some of the alleged employer mistakes were caused by “errors in HMRC systems, which were not designed to deal with all the complexities of PAYE”.
He urged the Revenue to make “significant and urgent investment” in its processing and backend software systems, which collect and process data to generate the operational efficiencies envisaged when real-time information (RTI) was conceived.
Association of Tax Technicians (ATT) president Natalie Miller described the P800 problems as “alarming” and called for an urgent review of the RTI system.
“Two things are suggested if, as HMRC’s reported comments suggest, the problem arose because employers had failed to send full payment submissions,” said Miller. “First, the process is too complex for employers to understand.
“Second, either the Revenue knows the information to be incomplete and is failing to address the matter before placing reliance on the information, or officials do not know the information is incomplete, which raises the equally worrying prospect that the system cannot identify when important information is missing.”
The ATT head claimed RTI has not been “delivering information that is real” and demanded a thorough investigation by a team of HMRC personnel and external specialists.
Baker Tilly partner George Bull criticised the Revenue for blaming employers. He said the accounting industry had spent months prior to the PAYE gaffe warning the department that “RTI has certain flaws that would undermine the year-end reconciliation process”.
He called for a “little humility on the part of HMRC, and a willingness to engage more closely with employers and accountants who have a shared interest in getting RTI right”.
