MSE News: Thousands of tax code blunder victims to discover fate today

chrismac1

many thanks for your heartless comments, dori. Other readers should note that this is pretty standard for people manning the HMRC helplines who'll be dealing with their cases.

I run payrolls for a variety of pubs, restaurants etc. and have many students on the books. When they join they are all asked if they have another job, and the P46s are filled in correctly. So some are on 647L and some are on BR and hence getting a whack of tax and NI paid.

Now if that student was honest and worked at one of my clients there would have been no problem. So did he lie and say "no this is my only job?". Or - mor likely in my view - did these employers not bother to do his joining data too well and simply put him on the 647L option on the casual assumption that he had no other job?

In which case he is the innocent party. I totally agree that the tax & finance basics should be taught in school instead of some of the politically correct drivel that is taught. But they have not been, and most of these guys don't have a clue about it - I talk to them when they have a query so I can confirm they don't have a clue.

A bit more heart please, dori - at work as well as on this site.

olivetti

Dori did not make heartless comments, in any case it is very hard to include heart in collecting tax, if not impossible. People end up on the wrong tax code at some point, after they know about it once it is very unlikely for the same person to end up in the same postion again.

PAYE disconnects people from their tax in the same way that prepackaged meat in supermarkets disconnects some people from the fact that meat comes from animals. They ignore the system, mainly because there is not enough education at the right times.

Perhaps we should just go down the US system and have a standard witholding tax with everyone completing a tax form each year to claim their reliefs....

This is not a blunder by HMRC it is a result of a system that is no longer fit for purpose and that investment was held back until it was too little too late. What has happened here has happened every year since PAYE was introduced it is just more automated now.

chrismac1

“This issue highlights the problems caused by the complexity of the UK’s tax system. Only today we also hear that millions of pounds are owed to those who do their own tax returns due to errors in the self assessment system. Self assessment tax payers and employers are clearly having problems with tax codes. I know that many will be asking whether they can trust the UK’s tax regime.”

This is from the head of ACCA, the leading accountancy body.

The assumption that "it's the taxpayer's fault, he or she should have done X, Y or Z" is in my view totally unjustified 90% of the time. I deal with these taxpayers every day of my life, most of them - the vast majority - are innocent victims of a system which places a myriad of responsibilities on them but makes totally inadequate efforts to explain what those are - then comes down on them like a ton of bricks when things go wrong.

It's unusual to find someone working for HMRC who shows any genuine empathy with the taxpayer.

harryhound

olivetti wrote: »

Dori did not make heartless comments, in any case it is very hard to include heart in collecting tax, if not impossible. People end up on the wrong tax code at some point, after they know about it once it is very unlikely for the same person to end up in the same postion again.

PAYE disconnects people from their tax in the same way that prepackaged meat in supermarkets disconnects some people from the fact that meat comes from animals. They ignore the system, mainly because there is not enough education at the right times.

Perhaps we should just go down the US system and have a standard witholding tax with everyone completing a tax form each year to claim their reliefs....

This is not a blunder by HMRC it is a result of a system that is no longer fit for purpose and that investment was held back until it was too little too late. What has happened here has happened every year since PAYE was introduced it is just more automated now.

In the old days, less than 30% of national income was gobbled up by the tax system, it is more like 50% now. So many less working people had to pay tax, and I doubt any students would have.

Back in the 1960's, when I was a teenager, I did a Christmas holiday job at the age of 15 working in an off licence. I did not get any tax deducted.
The next year I got a job on a golf course, tax was deducted so I simply wrote to the tax office and got it refunded promptly (now if I write I have no idea if the letter has been delivered for months.).

Coming forward to the early 1990's, my daughter got a job as a schoolgirl working for Trust House Forte (Little Chef) and got paid with no tax deducted. Trust Houses Forte then got taken over by Granada and tax chaos ensued.
It was a right hassle getting her tax back from the Inland Revenue somewhere in Scotland. When I got involved I got one of those "Oh no not another one" groans from the Scottish officer involved.

http://wapedia.mobi/en/Trusthouse_Forte

WaxiesDargle

I have two incomes and have done since March 2009.

I already had a pension income of £21,319 since September 2006.....this is on a normal tax code with no NI (I'm 54)

In March 2009 I found a job earning £22,152...

this went up to £23,563 in March 2010

and in August 2010 went up to £27563

this income is on a BR CUMUL and paying NI

I don't have a clue if I'll get a dreaded brown envelope

harryhound

.....and the "normal" tax code for the PAYE on your pension is ?

(The new computer has been making major errors, like being given out of date information and thus assuming someone still has a company car)

jem16

WaxiesDargle wrote: »

I have two incomes and have done since March 2009.

I already had a pension income of £21,319 since September 2006.....this is on a normal tax code with no NI (I'm 54)

In March 2009 I found a job earning £22,152...

this went up to £23,563 in March 2010

and in August 2010 went up to £27563

this income is on a BR CUMUL and paying NI

I don't have a clue if I'll get a dreaded brown envelope

Assuming your normal tax code that you refer to is the basic personal allowance ( at the moment £6475) then having BR CUMUL on the 2nd income has been correct so doubtful that you would receive the brown envelope.

However since March 2010 you have just moved into higher rate tax and more so since August. So really you should now be contacting HMRC as you will be paying too little in tax now.

Before you call - do you make pension contributions in your job? If so how much and are they paid gross from your wages before tax?

WaxiesDargle

Hi Jem

Thank you for your reply.

Yes it is the basic personal allowance and I'm not in the pension scheme in my job....so I will be making that call to HMRC

thanks again

olivetti

chrismac1 wrote: »

“This issue highlights the problems caused by the complexity of the UK’s tax system. Only today we also hear that millions of pounds are owed to those who do their own tax returns due to errors in the self assessment system. Self assessment tax payers and employers are clearly having problems with tax codes. I know that many will be asking whether they can trust the UK’s tax regime.”

This is from the head of ACCA, the leading accountancy body.

The assumption that "it's the taxpayer's fault, he or she should have done X, Y or Z" is in my view totally unjustified 90% of the time. I deal with these taxpayers every day of my life, most of them - the vast majority - are innocent victims of a system which places a myriad of responsibilities on them but makes totally inadequate efforts to explain what those are - then comes down on them like a ton of bricks when things go wrong.

It's unusual to find someone working for HMRC who shows any genuine empathy with the taxpayer.

I fully agree that the vast majority of responsibility is put on to the tax payer, that is a result of 'self assessment' the clue really is in the name, despite the fact that most individuals don't complete a tax return we are all in the 'self assessment' system.

The information is there, available to people on HMRC's website (truly awful) and because HMRC has decided this is enough there are no longer leaflets and booklets available for people to read, unless the go to the website and spend 10 minutes looking for them. This has been doubly complicated by the rules changing, mainly for benefits in kind, on a regular basis due to government interference.

With the reduction in quantity and quality of HMRCs staff training and the fact that staff levels have been slashed and will continue to do so while workloads have gone up it is inevitable that something has to give and that is apparently service levels.

It is not usually the taxpayers fault when things go wrong, unless the complete a P46 incorrectly or such, but it can not be anything other than unequivocally their responsibility to make sure it is correct as best they can, just like any other personal liability. Help is available to taxpayers from a number of sources but you also find the 'ostrich' mentality is quite prevalent at each stage from not even reading what they have been sent to simply ignoring it and hoping it will go away.

jem16

WaxiesDargle wrote: »

Hi Jem

Thank you for your reply.

Yes it is the basic personal allowance and I'm not in the pension scheme in my job....so I will be making that call to HMRC

thanks again

You definitely should now be making some higher rate tax payments then. I was hoping you might be paying into a pension as that would reduce your taxable income and could have kept you in basic rate.