PAYE Error Notices

[Eric Mc]

Hard to know where this should go as it could also be posted in the "Employment" or "Business" forums.

I was wondering if people who have had received one of the millions of letters being sent out regarding the problems woth PAYE Coding Notices might want to post any queries in a dedicated thread?

[Marty Funkhouser]

http://www.dailymail.co.uk/news/article-1309639/Ta...


Just read this....be interesting to see the legalities here....

[Eric Mc]

Marty Funkhouser said:

http://www.dailymail.co.uk/news/article-1309639/Ta...


Just read this....be interesting to see the legalities here....

The legalities are clear.

Taxpayers have a duty to ensure they pay the correct tax.

[pugwash4x4]

Eric Mc said:

Marty Funkhouser said:

http://www.dailymail.co.uk/news/article-1309639/Ta...


Just read this....be interesting to see the legalities here....

The legalities are clear.

Taxpayers have a duty to ensure they pay the correct tax.

Indeed- but in my experience HMRC are far worse at repaying tax when you tell them that you have given them too much!

[Marty Funkhouser]

Eric Mc said:

Marty Funkhouser said:

http://www.dailymail.co.uk/news/article-1309639/Ta...


Just read this....be interesting to see the legalities here....

The legalities are clear.

Taxpayers have a duty to ensure they pay the correct tax.

Very true, but when they have taken reasonable steps - ie assuming their boss has worked it out correctly - it would seem unfair? Is everyone in employment supposed to employ their own accountant to check their employer has calculated their tax correctly?

Besides, my experiences of HMRC tax calculations as regards PAYE are shambolic to say the least.

Edited by Marty Funkhouser on Tuesday 7th September 10:57

[Eric Mc]

Marty Funkhouser said:

Eric Mc said:

Marty Funkhouser said:

http://www.dailymail.co.uk/news/article-1309639/Ta...


Just read this....be interesting to see the legalities here....

The legalities are clear.

Taxpayers have a duty to ensure they pay the correct tax.

Very true, but when they have taken reasonable steps - ie assuming their boss has worked it out correctly - it would seem unfair? Is everyone in employment supposed to employ their own accountant to check their employer has calculated their tax correctly?

Besides, my experiences of HMRC tax calculations as regards PAYE are shambolic to say the least.

Edited by Marty Funkhouser on Tuesday 7th September 10:57

Don't confuse the strict legal position against what HMRC may accept as mitigating circumstances. Statutory Concession A19 will allow a taxpayer to escape having to pay legally due tax IF they can prove that they DID take all reasonable steps to notify those responsible for calculating their tax liability for them i.e. HMRC, their employers, their pension provider etc.

The important thing to note is that A19 is "Extra Satutory" which means that it is not in accordance with the legally correct position.

Assuming that your boss has worked out your tax correctly would not stand a chance of being accepted as "taking rerasonable steps". The first element to taking "reasonable steps" would be to realise at some point that there was a problem with your PAYE Coding, notifying your emnployer of the problem and perhaps notifying HMRC as well AND keeping some documentary evidence that you actually DID all this.

[pugwash4x4]

Eric Mc said:

Marty Funkhouser said:

Eric Mc said:

Marty Funkhouser said:

http://www.dailymail.co.uk/news/article-1309639/Ta...


Just read this....be interesting to see the legalities here....

The legalities are clear.

Taxpayers have a duty to ensure they pay the correct tax.

Very true, but when they have taken reasonable steps - ie assuming their boss has worked it out correctly - it would seem unfair? Is everyone in employment supposed to employ their own accountant to check their employer has calculated their tax correctly?

Besides, my experiences of HMRC tax calculations as regards PAYE are shambolic to say the least.

Edited by Marty Funkhouser on Tuesday 7th September 10:57

Don't confuse the strict legal position against what HMRC may accept as mitigating circumstances. Statutory Concession A19 will allow a taxpayer to escape having to pay legally due tax IF they can prove that they DID take all reasonable steps to notify those responsible for calculating their tax liability for them i.e. HMRC, their employers, their pension provider etc.

The important thing to note is that A19 is "Extra Satutory" which means that it is not in accordance with the legally correct position.

Assuming that your boss has worked out your tax correctly would not stand a chance of being accepted as "taking rerasonable steps". The first element to taking "reasonable steps" would be to realise at some point that there was a problem with your PAYE Coding, notifying your emnployer of the problem and perhaps notifying HMRC as well AND keeping some documentary evidence that you actually DID all this.

and this is why everyone hates HMRC.......

most of us understand the need to pay taxes, but the completely impossible hash of it that HMRC makes, does turn a lot of people against paying taxes.

For me, i'd like to see the whole of HMRC scrapped, a fairer clearer tax system imposed, and everyones life made a lot easier (and of course we'd save the money on all the beauracracy!)

[Eric Mc]

The real reason - as explained by an HMRC Officer

In a comment on PublicTechnology.net, an HMRC official explained, “The roots of this are in the fact that PAYE came in during the Second World War in 1944, at a time when many people stayed with the same employer during the whole of their working lives. It’s not like that anymore.

“We have to reflect that and have new systems. Because circumstances change during the year there will always be a minority who have paid either too much or too little. This year, and going forward, the new IT system will mean more people paying exactly the right tax at the right time than ever before.”

Trying to incorporate the sometimes complex systems of rates, allowances and tax reliefs that can be applicable to any one individual and then apply that over 30 million people in a Catch All PAYE Coding system is proving horrendously complicated, and virtually impossible to keep on top of.

Edited by Eric Mc on Tuesday 7th September 11:30

[pugwash4x4]

Eric Mc said:

The real reason - as explained by an HMRC Officer

In a comment on PublicTechnology.net, an HMRC official explained, “The roots of this are in the fact that PAYE came in during the Second World War in 1944, at a time when many people stayed with the same employer during the whole of their working lives. It’s not like that anymore.

“We have to reflect that and have new systems. Because circumstances change during the year there will always be a minority who have paid either too much or too little. This year, and going forward, the new IT system will mean more people paying exactly the right tax at the right time than ever before.”

Trying to incorporate the sometimes complex systems of rates, allowances and tax reliefs that can be applicable to any one individual and then apply that over 30 million people in a Catch All PAYE Coding system is proving horrendously complicated, and virtually impossible to keep on top of.

Edited by Eric Mc on Tuesday 7th September 11:30

so pretty much as per previous post- its too complicated, a system that doesn't fit reality, but ew're going to chuk money at it until its fixed.

[Eric Mc]

The following allowances and tax regulations would have to be abolished to make PAYE Coding simpler -

Additional allowances for those over 65 and over 75
The Married Personal Allowance for the over 75s
The Complicated Age Abatement rules for those over 65 earning over £22,900
Taxation of the State Pension
Attempts to use the Coding system to collect tax on non-PAYE related income
Attempts to use the Coding system to collect tax for earlier years

Don't even start me in Benefits in Kind.

The Coding system is complicated because UK tax is complicated.

Edited by Eric Mc on Tuesday 7th September 14:23

[pugwash4x4]

Eric Mc said:

The following allowances and tax regulations would have to be abolished to make PAYE Coding simpler -

Additional allowances for those over 65 and over 75
The Married Personal Allowance for the over 75s
The Complicated Age Abatement rules for those over 65 earning over £22,900
Taxation of the State Pension
Attempts to use the Coding system to collect tax on non-PAYE related income
Attempts to use the Coding system to collect tax for earlier years

Don't even start me in Benefits in Kind.

The Coding system is complicated because UK tax is complicated.

Edited by Eric Mc on Tuesday 7th September 14:23

indeed- you aren't the only accountant that has to deal with it

rationilising individual taxation would be a huge reduction of workload on industry, government and the individual- it would save billions throughout the economy.

[Eric Mc]

Thread resurrected to highlight a disturbing trend I have noticed this year regarding the PAYE Codings for those who have started receiving the State Pension part way through the tax year.

This year, a couple of my clients reached 60 (if female) or 65 (if male) and therefore started receiving their state pensions. Obviously, unless someone happens to be born on 6 April, most peoples' pension income for the first year will actually be from their birthday to the following 5 April i.e. not a full year's worth of pension.

State Pensions are taxable and are subject to PAYE. The PAYE is collected, not by taking a deduction from the State Pension itself, but by changing the taxpayer's PAYE Notice of Coding used for some other source of PAYE income, such as an employment or a private pension.

The worrying thing is that in EVERY case I have come across this year, HMRC have initially amended the PAYE Coding notice by inserting the full 52 week value of the State Pension amount - even if the recipient is only getting the State Pension for part of the year e.g, if they turned 65 on 31 August 2010. they would only receive 32 weeks worth of pension, not 52 weeks.

So, if any of you reach the magic age this year or next year, examnine VERY closely what HMRC are doing with your PAYE Coding as they may be ripping you off.

Edited by Eric Mc on Thursday 7th October 10:17

[OneDs]

Bugger! Letter landed with a sizeable thud on Saturday, hefty figure of pain to pay back, over the tax code adjustment level.

I changed employer on the 1st Apr 2009 and stupidly thought that it would make it simpler for all concerned, however I didn't reckon on a payment from my old employer in terms of a closed savings benefit plan which was taxed & NI'd at sourced two months later being completely wrong, looking at it over the weekend, the tax code is wrong BR M1 (not 647L) and without any reasonable of assumption of what my annual earnings for the year might have been. I did question that I got slightly more than I thought I would at the time and the previous employer said that this is what they do in these situations but have no documentary proof that I did.

Needless to say the main reason for the change in job was a relocation & lifestyle change, all the money from the saving plan and everything else we had was ploughed in to house renovations and I now have significantly less capability to pay it back, double

Edited by OneDs on Monday 25th October 10:16