MSE News: Have you been sent a wrong tax code by HMRC?

in Cutting Tax
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  • zygurat789zygurat789 Forumite
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    And how would a computer calculate tax without some sort of code number?
    Back to square one.
    We have a complex system in the name of fairness and that needs administering and policing. This is done by relatively few people in the know HMRC/accountants/wages offices. Wasn't this originally brought in so that the government got their hands on taxes sooner through PAYE.
    The only thing that is constant is change.
  • MikeyorksMikeyorks Forumite
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    Your employer sends off you pay gross, but it is routed through a computer managed by HMRC.
    This computer knows all about the National Insurance/tax payer and makes the appropriate deductions before passing on the net amount to the tax payers bank account.

    No I didn't hear that ..... but I wish I had a few bottles of the stuff the dreamer who thought that up had been inbibing!:D

    HMRC (this thread) are unable to issue correct Codes based on basic data. Having consolidated the data they hold - the results from their prior system (COP) are often different to that from their new system (NPS) ..... and they did not do that very basic conformity test before releasing it on an unsuspecting public!
    They have, for years, mandated data from the financial institutions on accounts we all hold / interest paid etc (TDSI - Tax Deduction Scheme for Interest). But are still unable to rationally consolidate all of that or even come up with a consistent electronic reporting format. Still accepting data on :-
    ½" tape, 3.5" floppy disks, CD-ROM, DVD, USB datastick or paper

    Just of those 2 examples .... how would they propose to manage a system which turns gross into net for every employee in the country? It might just work for the large payroll companies. But it is the very stated justification of the new system :
    modern part time jobs and frequent changes of employment
    ........... that would damn it from the outset. Does anyone seriously envisage pubs / clubs et al coping with the requirements? Pass the bottle!
    If you want to test the depth of the water .........don't use both feet !
  • easyeasy Forumite
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    Your employer sends off you pay gross, but it is routed through a computer managed by HMRC.
    This computer knows all about the National Insurance/tax payer and makes the appropriate deductions before passing on the net amount to the tax payers bank account.

    So the money for every salary payment in the UK would go via a government bank account?

    That prospect fills me with :eek::eek::eek:

    Given that they can't get the business of simply assigning codes correct, the idea that they would do any better when it comes to actually making the deductions, and delivering the correct net pay to the correct employee is pretty unlikely.

    In addition, I envisage that it would take them at least 5 days to make any payment (currently any electronic payment to or from a government dept takes at least 3 days, even tho the majority of commercial bank to bank transactions can now clear within 1 working day). I would guess that if you change your employment it could take weeks or months to start getting your correct salary.

    If they did get your tax calculation wrong, how long would you need to fight to get your due funds paid to you? Or if the error was in your favour, how would you cope when they suddenly made a large salary deduction to correct the error (look how people struggled when incorrect tax credits were suddenly clawed back).

    No, I hate this idea for loads of practical reasons. As well as that, I just don't feel comfortable that the revenue should handle every penny we get paid. It's just too much state control.
    I try not to get too stressed out on the forum. I won't argue, i'll just leave a thread if you don't like what I say. :)
  • MikeyorksMikeyorks Forumite
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    easy wrote: »
    So the money for every salary payment in the UK would go via a government bank account?

    I didn't read it like that. It would be a standard BACS Direct Credit of the sort usually used to pay salary / wages and containing the employee Bank details as held by the employer. But routed by BACS (who initiate all these transmissions) via HMRC who would split it into 2 transactions .... the 'net' continuing on it's way. And the deductions routed into HMRC to be split (as now) into PAYE / NI / SLC etc. All of that could be done by current technology overnight and without adding anything to the timeframe of the salary getting to the employee Bank.

    It actually has a lot of attractions (other than the fact it won't work!). Not the least of which is a dramatically improved tax flow to the Exchequer. As PAYE etc would be paid at the same time as salary. At the moments businesses have use of that money until the 22nd of the following month .. as a free loan for acting as unpaid tax collectors. But the NI number would have to go (or be significantly revised) as it's the only 'safe' reference to use between the employer and HMRC. And it's not safe for such a critical application .... as it has no check character protection and no safeguard against duplication or interception
    If you want to test the depth of the water .........don't use both feet !
  • edited 24 February 2010 at 8:10PM
    easyeasy Forumite
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    edited 24 February 2010 at 8:10PM
    Mikeyorks wrote: »
    I didn't read it like that. It would be a standard BACS Direct Credit of the sort usually used to pay salary / wages and containing the employee Bank details as held by the employer. But routed by BACS (who initiate all these transmissions) via HMRC who would split it into 2 transactions .... the 'net' continuing on it's way. And the deductions routed into HMRC to be split (as now) into PAYE / NI / SLC etc. All of that could be done by current technology overnight and without adding anything to the timeframe of the salary getting to the employee Bank.


    But a BACS transaction should be secure, it would make a mockery of that if the employer initiates a payment, which is intercepted and adjusted by HMRC, before it "continues on it's way".

    It would be a whole change to the way banking transactions work. That's why I assumed the money would enter an HMRC bank account, with the net passing on to the employee (after the Govt had sat on it reaping interest for 24 hours or more, which is what the banks have just stopped doing).
    Mikeyorks wrote: »
    But the NI number would have to go (or be significantly revised) as it's the only 'safe' reference to use between the employer and HMRC. And it's not safe for such a critical application .... as it has no check character protection and no safeguard against duplication or interception

    Hmm, wouldn't that give the govt a reason to re-introduce the idea of ID cards, a way of giving us all more secure and useful unique numbers? A plan I didn't like, not because I have anything to hide, but simply because it opens the door to the state having access to an increasing amount of personal information, which could be leaked to .... well, who knows?? Let alone the idea that once that information is in the hands of a central authority, the potential for it's use against us in the future becomes a real threat....
    I try not to get too stressed out on the forum. I won't argue, i'll just leave a thread if you don't like what I say. :)
  • MikeyorksMikeyorks Forumite
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    easy wrote: »
    But a BACS transaction should be secure,....
    But BACS Direct Credit is already a multi-stage transaction .... with the employer creating a file to BACS before they fragment it into individual transactions aimed at the Banks. HMRC (already a major BACS user both in and out) would simply doctor a partially pre-populated 2 stage record to split the original into net and deduction records, via a secure server. And send the, now twin, records on their way. Despite their ability to lose data on discs and issue incorrect Code numbers ... HMRC do operate about the largest financial databases in the UK.

    Hmm, wouldn't that give the govt a reason to re-introduce the idea of ID cards, a way of giving us all more secure and useful unique numbers?

    Must admit I hadn't considered that aspect. But when you consider that the only common thread between PAYE / SA / Pensions / SLC etc is the NINO ....... I can't see all those systems retrofitting to a completely different style of reference?

    However ..... just musing overall that I can see considerable benefit in Exchequer flow, employer payroll , HMRC staffing etc. But I still don't see it working for other than the employers who least need it!
    If you want to test the depth of the water .........don't use both feet !
  • John_PierpointJohn_Pierpoint Forumite
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    Somehow I think the employees would bring the others into line?

    Even while working for top 250 companies, I remember the odd mess up on the payroll.
  • I have had two wierd tax codes, despite paying my SA and my payment on account (3K+1.5K) My tax code firstly came out approx 3K less, quick call they sent another one this time it was 0!

    Second phone call its back to normal, the strange thing is with this, a quick (ish) phone call and they just apply a new code on the back on a conversation. Is there no diligence to it? or just a quick we have 10 seconds to decide a code then move on?
  • MikeyorksMikeyorks Forumite
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    Is there no diligence to it? or just a quick we have 10 seconds to decide a code then move on?

    More likely they're now getting so used to the pattern of errors that it's easy to see where the problem is ..... so the fix is quicker?
    If you want to test the depth of the water .........don't use both feet !
  • Hey folks,

    I finally received my tax code change this morning (even though the letter was dated 11th Jan!!). It states I have been given the code BR and it has been passed on to my employer.

    HOWEVER I was made redundant by my employer back in Sept last year and I’m currently unemployed and I’m not on JSA because I think it’s just a waste of time!!

    What should I do??? Should I contact hmrc and let them know about the situation or just leave it be???

    Im a bit confused and could do with a bit of help

    Thanks all!!!
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