My thanks to a loyal reader who has drawn my attention to a rather large backlog of unmatched P14 Forms (dealing with PAYE etc). held in HMRC's the Residual File (more commonly known as a "dump account").
The "dump account" contains unmatched details of salary, tax and NI Contributions which are not attributed to any individual.
The tax and NI Contributions have been deducted by employers and paid into the Treasury. However, the fact that these "unmatched" income details exist means that HMRC have not been able to determine the true tax liability for these individuals.
This means that some taxpayers may be liable to pay more tax, and others may be due a tax refund.
Surely only a few taxpayers are in this position though?
Ermmm..no!
My correspondent also copied me the results of a Freedom of Information (FoI) request relating to the matter. Seemingly, as at 5th April 2007, the number of forms P14 within the Residual File, was as follows:
- where the Pay figure was between £20K-£29,999K 365,091
- where the Pay figure was between £30K-£39,999K 148,570
- where the Pay figure was £40K or more 365,091
A grand total of 878,752 unmatched P14's.
However, the problem doesn't just stop there with the unmatched P14's. I draw your attention to The National Audit Office Report for 2007/2008 (Summary - Item 12).
"At the end of the tax year, the Department's computer system may identify discrepancies in taxpayer records or be unable to match a return to a record and so it will establish an 'open case' for manual checking.
Delays in clearing 'open cases' can mean that taxpayers are not notified on a timely basis of additional tax payable or refunds due.
At the end of March 2008 the Department had 16.2 million open cases, which exceeded its target of 12.5 million, because computer system developments did not deliver the reduction in cases expected, staff were released to other work and there was lower than anticipated overtime.
The Department plans to reach a steady state position by 2010 where open cases for each tax year are cleared within a year and there are no backlogs for 2006-07 and earlier years. The number of cases that will require manual intervention following the implementation of the computer changes cannot be predicted with absolute certainty, so the Department needs to consider the processing resources necessary to clear the backlog of 'open cases', should this exceed its current estimate."
The figure of 16.2 million represents approximately 50% of all PAYE records dealt with by HMRC, in other words 50% of the PAYE population have not had their PAYE liability reviewed.
This figure of unreviewed PAYE Tax liability has been growing substantially over the past few years. Computer Weekly provides a rather alarming set of statistics:
HMRC open cases
-1998: 2.5 million
-1999: 4.8 million
-2001: 8.5 million (1,250 extra staff were hired to reduce the backlog)
-2007: 11.5 million
-2008: 16 million
-2009: 20 million
The backlog means that HMRC, if they wish to resolve the matter, will have to divert money and resources into resolving the discrepancies.
One might question as to what the £8.5BN being paid to IT consultants is really being used for?
Tax does have to be taxing.
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This is nothing short of scandalous and makes a complete mockery of accountability. By rights those at the top of the tree, namely Clasper, Hartnett and Strathie, who have much to answer for and should be roasted alive by the PAO for wholesale neglect and incompetence.
ReplyDelete...I mean, of course, roasted alive by the public accounts committee...
ReplyDeleteSince they are based on years worked, do lost/unmatched PAYE records impact people's state pensions?
ReplyDelete"Since they are based on years worked, do lost/unmatched PAYE records impact people's state pensions?"
ReplyDeleteIn theory they could but I think they only use 30 years contributions to calculate your pension. So if you only work for 40 years there would have to be 10 years unaccounted for before it had an impact. You would think that during that time at least 1 employer would remember to put a National Insurance number or date of birth on your P14.
To lay the blame solely at the door of HMRC is both unfair and incorrect. It is the reponsibility of the employer to send in fully completed P14's (and p45s), which is a task that eludes the bulk of employers. It is physically impossible to deal with each form as it is recived due to the sheer number of items processed.
ReplyDeleteTo answer the question regarding pension contributions. Unmatches p14s really should have no material impact. You are supplied with both p60/45 and regular payslips which should be kept for future reference. Should an individual not retain their documents they can request duplicates (employers should retain all details for 6 years) or clal HMRC who can send forms asking for the employer to send them duplicates.
It may not be HMRC's fault but if the number of cases reported here is correct maybe it is time HMRC pulled their finger out and found away to deal with the problem (I am sure there is somebody who can invent a new prodecure for this).
ReplyDeleteWell the procedure is now that all End of Year documents should be filed online from 2010 onwards. If the boasts of the new 'MPPC' system are to believed things should start to get a lot more streamlined over the next year or two.
ReplyDeleteDocuments should therefore be allocated directly against people's PAYE records. Also, it should be able to process repayments automatically when a p14 from every live employment is recieved (and p11Ds where appropriate).
Obviously there may be teething troubles but it is a step in the right direction.
"It may not be HMRC's fault but if the number of cases reported here is correct maybe it is time HMRC pulled their finger out and found a way to deal with the problem."
ReplyDeleteThey have. Online filing means employers can't send P14s with so little information they can't be matched. If it doesn't have at least some useful information the whole Return is incomplete and effectively not received by HMRC.
"If it doesn't have at least some useful information the whole Return is incomplete and effectively not received by HMRC"... then what? Dump it, or what?
ReplyDelete"then what? Dump it, or what?"
ReplyDeleteNo. It just doesn't work. The employer/agent has to fill in the missing entries and try again.