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HMRC Tax code mayhem for 2010/11

HMRC Tax code mayhem for 2010/11
Tuesday, 26 January 2010 00:00

HMRC have been issuing incorrect notices for 2010/11 and it has recently emerged that errors in the HM Revenue & Customs modernised, single national computer system were known about last September.

This year HMRC will be issuing 25 million tax coding notices and worries are increasing that a significant proportion of these are incorrect. The codes dictate how much employers and pension firms deduct in income tax for the coming 2010/11 financial year.

The Chartered Institute of Taxation (CIOT) wants HMRC to act to warn people of the possible problem. Specifically, HMRC should issue a clear public statement of the extent of the problem and explain what they are doing to tackle it.

This should involve a major publicity campaign, adverts in the national media and a clear, easy to find message on the HMRC website detailing how people can check whether their tax code is correct.

To date though HMRC's response has been to issue a guidance pages on their website http://www.hmrc.gov.uk/incometax/annual-coding.htm. Here they state

"We advised you that HMRC recently introduced a new National Insurance and PAYE system and that we are using it to issue tax coding notices for the first time - follow the link at the end of this page to read our earlier message.

The transition to the new system has brought to light some discrepancies in our existing records and this is resulting in a number of incorrect Coding Notices being issued.

We have been working hard to identify situations where customers could receive an incorrect Coding Notice and have identified three key situations where this may occur. These are where:

  • a previous employment stopped some time ago but our system has not picked this up and a Coding Notice has been sent for that employment
  • two notices have been sent for the same employment
  • the code BR (basic tax) or DO (higher rate tax) has been given for an employment or pension for the first time

We are looking to correct as many of these discrepancies as possible well in advance of the new tax year and we are doing all we can to ensure no one pays too much tax from April.

If you are concerned about your tax code and you think it is wrong, particularly if it falls into one of these three categories, then check it using the guidance included with the Coding Notice and on our website.

Find out more about tax codes and your PAYE Coding Notice

If you cannot resolve your query using this please contact us on 0845 3000 627 so we can make sure you have the right tax code applied in time for the start of the new tax year on 6 April 2010."

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