The fiasco surrounding HMRC’s attempt to introduce a new system to cope with PAYE codes earlier this year continues with news that PAYE processing errors resulted in a 15.7% increase in underpayments and a 148% increase in overpayments.
A total of £238m was overpaid, much of it by pensioners on modest incomes.
UHY Hacker Young says it has witnessed an increase in the number of taxpayers and umbrella company contractors who received incorrect coding notices in the last 12 months. Tax manager, Rob Durrant-Walker said that the new system should be able to cope with increased job mobility and therefore produce more accurate codes. An increase of 148% in just one year is clearly unacceptable, he added.
HMRC said that the PAYE system took in £250bn last year so these figures should be put in context. They admit liability for some of the over-charging, but say that not all of the errors are their fault.
There are several reasons why taxpayers may have made an overpayment. Having an emergency tax code when starting a new job, having more than one job, or only working for a few months in the year, are just some of the reasons given by the Taxman.
HMRC also said that they have never known a case where a pensioner employs a top 20 accountancy firm to manage their tax and that UHY Hacker Young is using pensioners as a way to make the issue emotional. However, the Revenue does admit that it needs to do better and that collecting money it is not owed is not fair.
Meanwhile, the Comptroller and Auditor General has prepared an appendix to HMRC’s annual accounts for the last financial year that suggests that if the 18 million still unresolved cases are taken into consideration, there may still be £1.6bn in repayments outstanding going back to the tax year 2007-08 and before.
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Image: 321/365 – devestated. by B Rosen
