MSE News: Pensioners hit by further HMRC tax code errors

John_Pierpoint

All these explanations do not get away from the simple fact that the average tax payer does not understand PAYE and NI when they are working.
HMRC over the last few years has not managed to keep abreast of reconciling tax payer's accounts.
Then the tax payer comes up for retirement and the basic tax system gets overlaid with additional complexity especially in the transition years.
It is just complexity and bureaucracy, what is really needed is simplification of the system, less government and less tax.

The only chancellor who made some progress was Nigel Lawson; though there just might be something being done about it:
http://www.hm-treasury.gov.uk/ots_press_pt_060312.htm
Don't hold your breath, or you will definitely be dead before we have a better tax system.;)

Dewpoint

dampsquib wrote: »

Actually .... that sounds correct to me! Due to the way the code number system works, they will have correctly included the equivalent of a full year's pension in your code, but should have also switched your code to be operated on a non-cumulative Month 1 Basis, which taxes each month is isolation and ignores what has happens in previous months. You would then have had roughly the correct amount deducted in January and subsequent months. However, if they forgot to switch you to Month 1 Basis, it would have resulted in a very very large deduction in January.

No it's not correct, and they did deduct a large chunk from my pension as I've already stated. What the updated NOC showed as an estimate for my state pension for 2011/12 was clearly incorrect and affected my tax liability for the whole of 2011/12, which is why my occupational pension provider deducted such a large chunk. I'm afraid HMRC are as useless as a bull with bits.

Dewpoint

Mikeyorks wrote: »

In which case you would be aware that if they don't issue a P161 .... you should request one.



This comes from DWP, not HMRC. Hence the importance of the P161.

The onus is on HMRC to request information and provide the forms not the other way around. I provided the information - they still haven't put it right.
This is the second !!!!-up in less than 12 months. Last year their unreliable and somewhat limited online tax return system had me in deficit to the tune of £900+ - complete nonsense. It took months and another complaint to my MP before these cretins realised the mistake was theirs. If I had run my business as the HMRC runs theirs, I would have been bankrupt in weeks. Unfortunately, inefficiency and abysmal service seems to be standard fare in public "service" and government departments.

dori2o

Dewpoint wrote: »

The onus is on HMRC to request information and provide the forms not the other way around. I provided the information - they still haven't put it right.

No it's not.

The onus to pay the correct amount of tax lies with the individual.

If you know or suspect something is wrong it is your responsibility to contact HMRC and put it right.

dampsquib

Dewpoint wrote: »

No it's not correct, and they did deduct a large chunk from my pension as I've already stated. What the updated NOC showed as an estimate for my state pension for 2011/12 was clearly incorrect and affected my tax liability for the whole of 2011/12, which is why my occupational pension provider deducted such a large chunk. I'm afraid HMRC are as useless as a bull with bits.

Did it mention towards the end of your NOC that your pension provider had been told to operate your code on a "special basis" (ie: Month 1 Basis, as mentioned in my earlier post)? If it did, then it could be that your pension provider is at fault as they failed to do so. If it didn't mention the Special Basis, then HMRC must have overlooked switching the basis. If your allowances were reduced 5000 and your code was operated on Mth 1 Basis, this would have caused an extra £83.33 to be deducted in January, in addition to any tax that was due on your occupational pension anyway. If HMRC or the payer failed to apply Month 1 Basis, you would have had an extra £833 deducted. By large chunk, do you mean £833? Posting some figures would help identify who you should be blaming.

Mikeyorks

Dewpoint wrote: »

The onus is on HMRC to request information and provide the forms not the other way around. I provided the information - they still haven't put it right.

But you haven't provided the information. You've just told them the £5k is incorrect without understanding what you're talking about.

and another complaint to my MP

- why am I not surprised. When people have serial problems with Banks / utilities / HMRC et al ........ you normally find the underlying problem is the 'people'.

xylophone

"I'm afraid HMRC are as useless as a bull with bits."
Do you mean "without bits..";)

John_Pierpoint

ots_review_of_pensioners_tax_060312.pdf

It is all explained in the above "Office of Tax Simplification" interim report - all 97 simplified pages of it.

"Pensioners expect a personalised service"

"There are 12,178,000 pensioners" [Including 11 aged 109 years old]

"53% of older people have a level of numeracy below that expected of a school leaver"

"[only] 41% of pensioners are aware that [state] pension is subject to income tax".

I'm not sure that is a definition of "cretin" - thought by some to be a derivation from Christian, but actually caused by thyroid problems such as a deficiency of iodine in the diet.

Connotations easily change over time. Idiot, imbecile, and moron were once neutral terms for a developmentally delayed adult with the mental age comparable to a toddler, preschooler, and primary school child, respectively.[15] As with Gresham's law, negative connotations tend to crowd out neutral ones, so the phrase mentally !!!!!! was pressed into service to replace them.[16] Mentally !!!!!!, too, has come to be considered inappropriate by some, because the word !!!!!! came to be commonly used as an insult of a person, thing, or idea. As a result, new terms like mentally challenged, with an intellectual disability, learning difficulties and special needs have widely replaced !!!!!!.

So for the HMRC contributors to this forum here is my challenge:

"Explain the 10% tax band and its effect to a pensioner?"

As part of my son's induction into as physics degree, he was expected to stand up and "Explain the concept and functioning of an LED light bulb to a taxi driver".

I think the latter task might be easier.

Dewpoint

dampsquib wrote: »

Did it mention towards the end of your NOC that your pension provider had been told to operate your code on a "special basis" (ie: Month 1 Basis, as mentioned in my earlier post)? If it did, then it could be that your pension provider is at fault as they failed to do so. If it didn't mention the Special Basis, then HMRC must have overlooked switching the basis. If your allowances were reduced 5000 and your code was operated on Mth 1 Basis, this would have caused an extra £83.33 to be deducted in January, in addition to any tax that was due on your occupational pension anyway. If HMRC or the payer failed to apply Month 1 Basis, you would have had an extra £833 deducted. By large chunk, do you mean £833? Posting some figures would help identify who you should be blaming.

"By a large chunk" - that is exactly what I mean. Overlooked? No incompetent, useless and a complete failure.

Mikeyorks

Dewpoint wrote: »

The onus is on HMRC to request information and provide the forms not the other way around.

Now you've rather belatedly provided the info that you were self employed ....... perhaps it's about time you relied on yourself rather than your MP :

When you're nearing State Pension age you'll receive form P161 Pension Coding asking for details of your age and income, including pension income. It's very important that you complete and return this. However if you're self-employed you won't automatically receive the form. You'll need to complete or download the form online, or request it from HM Revenue & Customs (HMRC).

I've little doubt the Code issued - done that way in the absence of a P161 - had a Month 1 suffix.