HMRC's Coding Enigma II

The confusion over HMRC's erroneous tax codes being sent out this year continues to rumble on.

Yesterday an HMRC spokesman said:

"It's a hangover from the old system.

Before we had five or six systems sending out tax codes, but because of last year's upgrade we now have one. The new system is basically picking up duplicates from the old one and flushing them out.

The new system is working as it should, and we're confident that it will not happen again in future."

Today, on their own website, HMRC (having been stung into action by the media) now say:

"The transition to the new system has, however brought to light discrepancies in our existing records and this is resulting in a number of incorrect notices being issued.

The vast majority of notices will be correct but there will be cases where, because the data carried over from our old systems does not match employers' data, some people receive an incorrect coding notice or more than one coding notice for the same employment because of these discrepancies.

This is a transitional issue caused by data mismatches, rather than an IT issue and will be resolved once we have cleared these from the system."

So it's not "duplicates", but "discrepancies in existing records". It most certainly isn't an "IT issue"!

I am having trouble understanding this, if there were discrepancies in existing records wouldn't that mean that HMRC would have sent out incorrect coding notices in previous years then?

I wonder what the reason will be next week?

Tax does have to be taxing.

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HMRC's Hangover

HMRC have explained away the cause of the new PAYE IT system issuing wrong codes, it's a hangover!

An HMRC spokesperson is quoted by ZDNet UK:

"It's a hangover from the old system.

Before we had five or six systems sending out tax codes, but because of last year's upgrade we now have one. The new system is basically picking up duplicates from the old one and flushing them out.

The new system is working as it should, and we're confident that it will not happen again in future."

Seemingly the issue mainly affects those who have changed jobs in the last two years.

So that's alright then!

Tax does have to be taxing.

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What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

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HMRC Dies Another Day

Another day, another HMRC IT cock up.

Hot on the heels to the avalanche of incorrect coding notices being sent out by HMRC, comes news in the Yorkshire Post of another IT related blunder by HMRC.

Seemingly 186,115 injured armed forces veterans and war widows have received letters from HMRC telling them that they will be taxed at 20% on their war pensions (war pensions actually have a not taxed (NT) status).

The letters were sent in error, as a result of "computer error" (isn't it funny how computers are always blamed, yet it is a human that designs and programmes them?).

Will HMRC be correcting this error?

Yes...but only after the ex servicemen and their widows contact HMRC first (ie HMRC will not correct the error automatically).

All very well, if the veterans are fully fit and have nothing better to do with their lives!

However, there are those who are very unwell (mentally and physically), who will stand for them against HMRC?

Anyone receiving a war pension, who is concerned, can call the Service Personnel and Veterans Agency SPVA helpline on 0800 169 2277.

Given the fact that HMRC is snowed under with queries/complaints etc, and apparently grinding to a halt, how long will this take to rectify?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Snowed Under

In keeping with the season, the FT reports that HMRC is snowed under with claims for tax repayments from companies.

Seemingly, businesses are waiting twice as long for corporation tax rebates from HMRC than they were a year ago.

Waiting times of a month (in comparison with 14 days last year) are now common.

The problem arises because the recession has increased the number of claims for rebates, which HMRC simply doesn't have the resources to handle in a timely manner.

Self assessment rebates for individuals are processed automatically. However, business rebates are processed manually.

Doubtless there will be those who argue (as they have done before) that if returns were input by businesses earlier in the year, the backlog would be lessened.

That is not unreasonable, up to a point. However, it should be remembered that the businesses are trying to drum up business and continue in operations; their time and energy are focused on that. HMRC's role is to make tax administration/payment etc simple, efficient and as least time consuming as possible.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC's Coding Enigma

It seems that HMRC's shiny new NIC & PAYE system (NPS), heralded as a major step forward by HMRC, isn't working terribly well.

What government managed IT project ever works "terribly well"? (Delete the word "well" from the previous phrase and you have the reality).

For reasons that only a computer would know, the HMRC database has "misplaced/lost" the information it is meant to contain about people leaving jobs.

The result?

The system is combining taxpayers' current employment records with old data, thus creating additional wealth and income which doesn't exist. This causes the system to calculate incorrect personal allowances and thus issue incorrect tax codes (which are of course used by employers to deduct tax).

How many people is this screw up affecting?

HMRC is issuing approximately 25 million tax coding notices this year, that is double the amount issued in the previous year. Therefore, it is not unreasonable to assume that several million taxpayers may be adversely affected by this.

Taxpayers need to be more than vigilant this year, when they receive their coding notices, and ensure that where there is an error that they notify HMRC immediately.

Quite how long it will take HMRC to rectify these errors remains to be seen.

Enigma - Sadeness

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Information

My thanks to a loyal reader who nudged me to take a look at the evidence given to the Public Accounts Committee on 7th December 2009 by HMRC.

Question 38 appears to indicate that HMRC have committed something of a "faux pas", by issuing assessments to the wrong accountants; ie they have sent details of some people's income etc to accountants not authorised to receive it.

Isn't disclosure of such information to non authorised people "illegal" under the rules of HMRC? It certainly appears to be breach of the Data Protection Act.

"Q38 Mr Bacon: Ms Walker, you mentioned the issue of confidentiality. Is it correct - I have got your CV here but I am not sure I am reading the right bit - that you are currently, since October 2008, the Director of PAYE, Self Assessment and National Insurance?

Ms Walker: That is right.

Q39 Mr Bacon: Good. On the National Insurance and PAYE service, the NPS section of the HMRC website, there is a reference under current issues to some notices and statements having been sent to the wrong agents. I will just read the first sentence. It says: "Even though HMRC's self assessment and PAYE systems are showing the correct details some notices and statements have been issued incorrectly to the wrong agent", by which one presumably means in most cases a tax accountant or something like that. How many cases?

Ms Walker: I do not have those figures with me I am afraid.

Q40 Mr Bacon: You do not. Over what period has this been going on?

Ms Walker: It happened over a period in the summer. It has now been fixed as I understand it.

Q41 Mr Bacon: It says on the website - you have anticipated one of my later questions - that "HMRC is due to put a fix in place in December 2009". That has now happened, has it?

Ms Walker: I believe it has.

Q42 Mr Bacon: When you say "over the summer", when did it start?

Ms Walker: The new PAYE system went live at the end of June.

Q43 Mr Bacon: Right, and this breach, data being sent to the wrong people, occurred starting at what point?

Ms Walker: I do not know the details of that; I know it was something that happened in the summer.

Q44 Mr Bacon: Could you write to the Committee with a note explaining that?

Ms Walker: I will do, yes.

Q45 Mr Bacon: Have you had any discussions with the Information Commissioner about this or anyone in HMRC because it would be appear to be an obvious breach of one of the principles of data protection, which is that information must be securely kept.

Ms Walker: We have taken advice on that; I would need to write to you and tell you the total answer.

Mr Bacon: You have not talked to the Information Commissioner or you do not know if anyone has talked to the Information Commissioner. You have put on your website - which is what I find extraordinary, especially after the issues with the HMRC and the National Audit Office where, famously, 25 million names went missing - that you have been sending notices and statements out to the wrong people. You have admitted the breach on your website but you do not know whether you have had any discussions with the Information Commissioner.

Q46 Chairman: What is the answer? Do not just all shake your head, either say yes or no.

Ms Strathie: We have taken this in a different context. What you have read, I am assuming, Mr Bacon, is the known problems that we keep updating so that agents and so on know what we are working on and what we are fixing. We owe the Committee a note and we will explain the Information Commissioner point in that.

Q47 Mr Bacon: You are quite right, there are issues that have been resolved and there are current issues. This one is under "Current issues" which suggests that it has not yet been resolved.

Ms Strathie: Yes, and we are just into December, so we will confirm that.

Q48 Mr Bacon: What is the difference between sending a notice to someone who has no right to know it, that informs them, say, that Mrs Smith of Middlesbrough or Mr Jones of Cornwall is on the verge of retirement and T-Mobile sending out information or using the information that they have no right to, to phone people up and say, "Your mobile phone contract is about to expire"? This information can easily be misused by people to do marketing that they have no right to do. You can easily imagine phone calls where people would say, "Hello Mrs Smith, now that you are about to retire ..." and start selling them products. This is potentially an extremely serious breach.

Ms Walker: This is not about information about people who are about to retire as I understand it.

Q49 Mr Bacon: It does not say what it is about but some of them may be in that category, we do not know. If someone is aged 64 then presumably they are about to retire, if they are 53 they are probably less likely to.

Ms Walker: Yes, but that will not be obvious from the information that was sent out.

Q50 Mr Bacon: It might if their date of birth was there.

Ms Walker: I believe these were notices of coding which were sent to the agent when they did not have the correct authority to receive them.

Q51 Mr Bacon: It says they were sent to the wrong agent, had been issued incorrectly to the wrong agent so Mr Smith's tax accountant in Cornwall gets sent something that should have been sent to Mrs Smith's tax accountant in Middlesbrough. That is what it reads like to me. Are you saying that is not the case, that I have misunderstood it?

Ms Walker: I would need to be properly briefed on that. I am sorry, I have not got the details with me.

Q52 Mr Bacon: Perhaps you could send the Committee a detailed note.

Ms Walker: Yes, indeed.

Q53 Chairman: I did not hear that last answer; what did you say?

Ms Walker: I am sorry, I said I do not have the information with me."

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"