HMRC Is Shite

HMRC Is Shite
Dedicated to the taxpayers of Britain, and the employees of Her Majesty's Revenue and Customs (HMRC), who have to endure the monumental shambles that is HMRC.

Monday, 9 September 2019

HMRC Glitch Impacts Bonus Payments

As those who have had snafus with their pension drawdowns can attest to, HMRC's software fails to recognise one off payments and instead assumes the person will receive the same amount every month.

Hence, middle-income earners who then receive a bonus may find themselves being taxed as if they are taking home a much higher salary.

Former Liberal Democrat MP Sir Steve Webb, who now works at pension firm Royal London, said three of his colleagues had been impacted by the miscalculation.
HMRC has a habit of taxing first and asking questions later, and this is yet another example. 

It is absurd to assume that a one-off bonus received at the start of a financial year is going to be repeated throughout the year and to tax people on that basis. 

People affected by this issue can have their monthly paypacket cut by hundreds of pounds with little or no notice and then have the hassle of contacting HMRC to get things put right.” 
Sir Steve claimed HMRC had failed to inform his team about changes to their “personal allowance”.

A spokesman form HMRC said if a customer’s tax code changes they are normally informed about this. HMRC said only a “small number” of people were affected by the glitch and issued an apology.
We will work with the employer to investigate if a tax code notice was sent to these customers.”
This "quirk" has been known about for sometime, therefore I am a tad surprised that people middle managers in Royal London were not aware of it.

Tax does have to be taxing.

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  1. As an insider (for the time being), I can tell you that it's the result of the badly-designed Real Time Information (RTI) system, which is programmed to assume that one month's pay is how it will be for the rest of the year, and adjusts the 'customer''s tax code accordingly.

    We spend an extraordinary amount of time on workarounds to correct it, as another 'feature' of RTI is that there is little possibility of actually over-riding the data sent us by employers/pension payers without sending the case off to a specialist team to review, and which is hopelessly understaffed in any case.

  2. Not just Bonus payments.

    Those on quarterly commission arrangements get hammered as well: Q1 commission typically get paid the the April payroll run9