RTI Errors - 5.5 Million Paid The Wrong Amount of Tax

Despite the introduction of RTI, the system that is meant to have done away with many reconciliation "errors" wrt PAYE, a large number of reconciliation "errors" (arising from changes in financial circumstances being picked up at the end of the tax year) are still occurring.

HMRC will be writing to approximately 5.5 million taxpayers to inform them that they paid the wrong amount of tax in 2013/14. It is estimated that of the 5.5 million, around 3.5 million have underpaid their tax.

The average over/underpayment is estimated to be around £300. Those who underpaid will be able to repay via PAYE in the coming year.

Whilst RTI is still bedding in, it is not unreasonable that there will still be reconciliation "errors". However, it is "ironic" that the 5.5 million figure for 2013/14 is higher than the 5.2 million in the previous year.

David Heaton of Baker Tilly, is quoted by the Telegraph:

“RTI was supposed to make PAYE more accurate, not less. So why are there more [errors] this year, with RTI in full flow, than last year, when RTI was only a pilot? The number of PAYE differences has risen, not fallen. 

Something in RTI is not working.”

Kate Upton, a payroll consultant, said:

“Taxpayers have spent hundreds of millions on RTI and employers have had to spend hundreds of millions to use the new system, so we are entitled to expect significantly fewer errors in the reconciliation process.”

HMRC said that the increase in "corrections" (HMRC doesn't use the word "error") was largely down to an increase in the number of people in employment that has come with the recovering economy.

A spokesman said that the effects of RTI had not been reflected yet, and it would eventually lead to a reduction in the number of corrections.

I would be interested to hear from people about their experiences of RTI, and whether it is working to their satisfaction.

Tax does have to be taxing.

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