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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 20th Jun 14, 8:13 AM
    • 2,324Posts
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    Former MSE Helen
    MSE News: Millions to repay tax after HMRC errors
    • #1
    • 20th Jun 14, 8:13 AM
    MSE News: Millions to repay tax after HMRC errors 20th Jun 14 at 8:13 AM
    HMRC mistakes left an estimated 5.5 million underpaying or overpaying their tax through PAYE in 2013-14...

    Read the full story:

    Millions to repay tax after HMRC errors



    Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.

Page 1
    • chrismac1
    • By chrismac1 20th Jun 14, 8:39 AM
    • 2,562 Posts
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    chrismac1
    • #2
    • 20th Jun 14, 8:39 AM
    • #2
    • 20th Jun 14, 8:39 AM
    I am glad RTI has been the massive success HMRC has claimed so publicly in the past. If this is success I would hate to see failure!

    Note also that I - along with most accountants and book-keepers I speak to - have noticed a really big increase in duff tax codes for PAYE 2014-2015. Examples include:

    1. A company car which was not in someone's tax code for 13-14 suddenly appearing for 14-15. The person had no use of the car from 1 July 13 when she left her job.

    2. A client being given an extra £6,000 tax-free allowances for no apparent reason.

    3. An employment which ceased in the 2012-13 tax year suddenly appearing on the 14-15 tax code.

    So please check your notices of coding carefully, there are more muck-ups in them than at any time in the past 5 years. And if you look back at the numerous threads on here about duff codes, that is really saying something!
    Hideous Muddles from Right Charlies
    • Pincher
    • By Pincher 20th Jun 14, 8:46 AM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    • #3
    • 20th Jun 14, 8:46 AM
    • #3
    • 20th Jun 14, 8:46 AM
    PAYE was always subject to correction by filing your taxes, since you can have interest, dividend, capital loss/gains, as well as alternative income, pension contribution and charitable donations.


    When I was getting a salary, I would rather lose some in tax, than file taxes. Once you ask for the tax form, they keep sending it to you, and then you have to file it, whether you have anything to declare or not.


    I still have a phobia about filing taxes, it takes me months of procrastination before I force myself to sit down. This year, I thought I would get it done early, and then the bank says they won't send the 2013/14 tax statement until July. The Horror, the horror.
    • Aquamania
    • By Aquamania 20th Jun 14, 9:25 AM
    • 2,027 Posts
    • 827 Thanks
    Aquamania
    • #4
    • 20th Jun 14, 9:25 AM
    • #4
    • 20th Jun 14, 9:25 AM
    HMRC advices/responses have been attrocious recently.

    We've had so many issues recently, but here is just one example.

    In March I was sent a new tax code for use start of this tax year. It was wrong and I advised HMRC accordingly. HMRC sent a new tax coding with the correction.

    Earlier this month I get another new tax coding (because of something entirely unrelated) But it has the original error back on it.

    I've given up. Will accept the new tax coding and then get a refund when I submit my tax return.
    • Aquamania
    • By Aquamania 20th Jun 14, 9:33 AM
    • 2,027 Posts
    • 827 Thanks
    Aquamania
    • #5
    • 20th Jun 14, 9:33 AM
    • #5
    • 20th Jun 14, 9:33 AM
    WTC calculations seem not much better.

    One of our employees brought their annual assessment into me to ask for help. According to the assessment, the employee was going to get about 25% less WTC this year than last year. And nothing has changed at all with her situation from last year (according to the assessment).
    Thats still waiting for HMRC to resolve, but I understand HMRC have reduced the payments in the meantime.
    Last edited by Aquamania; 20-06-2014 at 9:36 AM.
    • chrismac1
    • By chrismac1 20th Jun 14, 10:11 AM
    • 2,562 Posts
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    chrismac1
    • #6
    • 20th Jun 14, 10:11 AM
    • #6
    • 20th Jun 14, 10:11 AM
    My approach to the duff codes is as follows, given that each one takes an average of 15 minutes to resolve on the helplines:

    1. Identify what the correct code should be.
    2. If that will give my payroll staff person less tax-free allowances than the official code, ignore the official code even though strictly I should just apply it like a robot.
    3. If the correct code will give someone more tax-free allowances, call the helpline to get the official code changed to the correct one and then apply it.

    Please note the helplines are utterly snowed under with these calls, a situation which can only get worse as the full extent of the nightmare is publicised better. So it makes sense to only call where making the change is really necessary and ideally at off-peak times such as 8am.
    Hideous Muddles from Right Charlies
    • Aquamania
    • By Aquamania 20th Jun 14, 10:29 AM
    • 2,027 Posts
    • 827 Thanks
    Aquamania
    • #7
    • 20th Jun 14, 10:29 AM
    • #7
    • 20th Jun 14, 10:29 AM
    .2. If that will give my payroll staff person less tax-free allowances than the official code, ignore the official code even though strictly I should just apply it like a robot.
    Originally posted by chrismac1
    The employer is obligated to use the tax code as advised to them by HMRC

    The employer does not see the breakdown of how the tax code has been arrived at (unless the employee shows it them); they just get notified of the tax code to use.

    The employer should refer the employee to HMRC over any queries relating to the tax code HMRC has asked them to use.
  • Albert Tatlock
    • #8
    • 20th Jun 14, 11:21 AM
    • #8
    • 20th Jun 14, 11:21 AM
    I'd a letter from HMRC a couple of weeks back telling me my tax code had changed. To 0T :-/

    Two minute phone call with them and it was back up to 1000L.........but in the past I probably wouldn't have thought to challenge it - I wonder how many are in the same boat.
    • miller
    • By miller 20th Jun 14, 11:27 AM
    • 1,314 Posts
    • 488 Thanks
    miller
    • #9
    • 20th Jun 14, 11:27 AM
    • #9
    • 20th Jun 14, 11:27 AM
    I sent in an R40 on behalf of someone else (repayment of tax on savings income).

    Somehow the pension income was entered as £2000 below and the savings gross amount and tax deducted were added together (a clear mistake).

    HMRC then issued a cheque for a larger amount than the refund should be.

    Several weeks later a new P800 arrives with the pension income corrected, but not the error on the savings income.

    A demand for payment then arrives (cheque only by post, no prepaid envelope).

    Phoned up to correct the savings figures on the P800 and now waiting for that to arrive.

    If the R40 had been processed correctly, none of this time wasting activity would have been necessary.

    There needs to be a better complaints procedure with a clear tariff of compensation payable and/or an ombudsman that is easy to access like the FOS.

    The R40 claim for the previous year also had problems due to an RTI problem of HMRC's making.
    • minislim
    • By minislim 20th Jun 14, 1:36 PM
    • 333 Posts
    • 198 Thanks
    minislim
    and its the hmrc who say tax doesnt have to be taxing!

    it certainly seems that way.

    a couple of friends who are accountants told me before the real time system started that the hmrc where already having problems before hand.

    and that it was only set to get worse.

    how right they where!

    the only ones that couldnt see the ticking timebomb where hmrc themselves.
    • chrismac1
    • By chrismac1 20th Jun 14, 2:49 PM
    • 2,562 Posts
    • 1,548 Thanks
    chrismac1
    Aquamania,

    I have never before processed a tax code which was not on a P6. But the system is in meltdown. Also, I am filing these codes every month via RTI so HMRC get an opportunity every month to raise this issue. There is no point in me giving someone an extra £6k in tax-free pay, only to have HMRC hound the guy in 2 years' time for the underpayment of tax.

    RTI is real-time information only for the people submitting it. For HMRC it is "same old same old" muck-ups and taking years to process the stuff properly.
    Hideous Muddles from Right Charlies
    • Game_Over
    • By Game_Over 21st Jun 14, 11:31 AM
    • 117 Posts
    • 50 Thanks
    Game_Over
    Aquamania,

    I have never before processed a tax code which was not on a P6. But the system is in meltdown. Also, I am filing these codes every month via RTI so HMRC get an opportunity every month to raise this issue. There is no point in me giving someone an extra £6k in tax-free pay, only to have HMRC hound the guy in 2 years' time for the underpayment of tax.

    RTI is real-time information only for the people submitting it. For HMRC it is "same old same old" muck-ups and taking years to process the stuff properly.
    Originally posted by chrismac1
    Irrespective of your well meant intentions, and with respect, it is not your role as employer to decide how much tax your employees should be paying, except in strict accordance with the information provided to you by HMRC.
    As Aquamania says, employers are not given any breakdown of the tax code they are told to use by HMRC for each employee.

    Acting other than in accordance with the direction given by HMRC (no matter whether you believe them to be in melt-down or otherwise) could leave you open to either an allegation of illegal deduction from the employees wages or leave you as employer liable for any shortcomings in tax paid as the case may be.

    If you want to assist your employee, and feel certain they are underpaying tax, and your employee agrees with your assessment, then why not suggest paying the money that you think should be being paid to HMRC into a separate savings account in the name of the employee, so that if a tax demand does eventually arrive, the employee has the money available. At least that way, the employee will benefit from any interest earned on the money in the meantime ... and more importantly does not leave you as employer open to possible allegations of mal-practice.
    • chrismac1
    • By chrismac1 21st Jun 14, 11:53 AM
    • 2,562 Posts
    • 1,548 Thanks
    chrismac1
    I'm an accountant not the employer. With all respect, you seem to have no clue just how bad the situation is. I've discussed this on the phone with HMRC staff on a recorded telephone and they are fine with it.

    These tax codes are so wrong a blind man could see they are wrong, so long as the blind man was not working for HMRC's IT department.
    Hideous Muddles from Right Charlies
    • chrismac1
    • By chrismac1 21st Jun 14, 11:56 AM
    • 2,562 Posts
    • 1,548 Thanks
    chrismac1
    If Real Time Information is to mean anything other than a whole load of idiotic fines come October which will in turn completely clog up HMRC with appeals, and then the tribunals if HMRC are stupid enough not to accept the appeals,

    Then

    RTI must work both ways. HMRC are getting this stuff every month. We are now in month 3, there is no excuse for them not taking the month 3 data and sorting out all the silly codes with company cars from 2 years ago and all the rest of it.
    Hideous Muddles from Right Charlies
    • Game_Over
    • By Game_Over 21st Jun 14, 11:59 AM
    • 117 Posts
    • 50 Thanks
    Game_Over
    I'm an accountant not the employer. With all respect, you seem to have no clue just how bad the situation is. I've discussed this on the phone with HMRC staff on a recorded telephone and they are fine with it.

    These tax codes are so wrong a blind man could see they are wrong, so long as the blind man was not working for HMRC's IT department.
    Originally posted by chrismac1
    So you are a payroll office providing services to an employer and you are messing about with their employees tax codes???

    That's arguably worse!

    However, as you have specific, individual confirmation from HMRC that you may use different tax codes to those provided to the employer, then I suggest you carry on.

    My comments are obviously aimed towards all those that do not have the individual confirmation to the contrary that you claim to have.

    Not sure why HMRC didn't just issue a new tax coding? That's what they usually do where an error has been identified to them, and it only usually takes a few days, even during the current melt-down you talk about.
    Last edited by Game_Over; 21-06-2014 at 1:16 PM.
    • dillydilly
    • By dillydilly 16th Sep 14, 9:56 AM
    • 168 Posts
    • 133 Thanks
    dillydilly
    received a tax demand this morning for just short of £4000...

    don't worry, I knew it was owed as they've been paying us child benefit past two years but not taking it back. Issue apparently lies in the 'short tax return' - they said as long as you do a tax return it will be claimed back in my tax code, but apparently this doesn't apply to the short version. Despite them knowing I am receiving the benefit (my income varies so no point asking for it to stop being paid) and having my tax return details each year, no link was made to take it into account - the full tax return apparently has a tick box (how was I supposed to know that ??)

    as I say, not a worry for me as I was well aware I would have to return it so the money's waiting, but I wonder how many others have not ticked the box and are in for a nasty surprise ? and if they don't do the tax return, will it ever be identified by the revenue ? I'm just one of millions...
    • sheramber
    • By sheramber 16th Sep 14, 11:10 AM
    • 6,712 Posts
    • 5,035 Thanks
    sheramber
    received a tax demand this morning for just short of £4000...

    don't worry, I knew it was owed as they've been paying us child benefit past two years but not taking it back. Issue apparently lies in the 'short tax return' - they said as long as you do a tax return it will be claimed back in my tax code, but apparently this doesn't apply to the short version. Despite them knowing I am receiving the benefit (my income varies so no point asking for it to stop being paid) and having my tax return details each year, no link was made to take it into account - the full tax return apparently has a tick box (how was I supposed to know that ??)

    as I say, not a worry for me as I was well aware I would have to return it so the money's waiting, but I wonder how many others have not ticked the box and are in for a nasty surprise ? and if they don't do the tax return, will it ever be identified by the revenue ? I'm just one of millions...
    Originally posted by dillydilly

    The guide to filling in the short tax return states


    Paper filing
    If you decide to file your return on paper, first of all please check whether
    you can use the Short Tax Return. Based on our records for you, we think
    you will be able to use this form, but it is up to you to make sure that you
    can – so please check the list below before completing the form.

    Who cannot use the Short Tax Return?
    You must
    not
    use the Short Tax Return if, in the year 6 April 2013 to
    5 April 2014, you:




    were liable to the High Income Child Benefit Charge. For more information
    go to
    hmrc.gov.uk/childbenefitcharg
    • Spidernick
    • By Spidernick 16th Sep 14, 5:11 PM
    • 3,518 Posts
    • 7,669 Thanks
    Spidernick
    I had a classic coding notice today for a 40% taxpayer with no PA (due to level of income). It had by far the largest K code I had ever seen, with a huge deduction in the tens of thousands. I struggled to work out what had happened and then realised it was to do with a VCT claim on the 13/14 tax return.

    Assuming that the individual would make a large VCT investment each year was one thing (which isn't the case), but that wasn't all. The code put in an adjustment to allow for the 30% restriction on VCT relief, but then didn't give any credit for the investment itself, hence the ridiculous K code. You really couldn't make it up!
    'I want to die peacefully in my sleep, like my father. Not screaming and terrified like his passengers.' (Bob Monkhouse).

    Sky? Believe in better.

    Note: win, draw or lose (not 'loose' - opposite of tight!)
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