PAYE Procedures – Multiple coding notices for the same employeeThursday, February 18th, 2010
Two weeks ago we highlighted a coding notice problem involving the issuing by HMRC of multiple and contradictory coding notices. The problems reached the national press and HMRC has since published two updates on the situation.
The first was issued for distribution to employers by HMRC’s Business Customer Unit:
“Annual Coding: multiple or incorrect Coding Notices update
In January HMRC updated tax agents and employers via its website and professional representative bodies on the implementation of the new National Insurance and PAYE system and the issue of notices of coding for 2010/11.
We will shortly be able to provide more details of areas we have identified which could have caused an incorrect tax code to be sent. We hope this information will be of use to employers and those administering payrolls to understand how we can improve the quality of information held on NPS and the accuracy of future notices of coding. We are undertaking a review of those cases which include one or more of the issues identified and will issue revised notices of coding to the individuals as soon as possible if they have already been sent a incorrect code. This work is being prioritised so that we deal first with those individuals who are most vulnerable if their code is incorrect. Our plans to review codes will minimise the number of coding notices being sent to your employees or pensioners with these inaccuracies.
In most of the cases we have reviewed, where we believe the code may be incorrect, we have found a discrepancy between the data we hold and that shown by the employer or pension provider on forms P14. Where we can we will correct the data and send out a correct code to the customer but in some cases we will need to check information with the individual before we can make a change. In other areas we will be asking employers or pension providers to work with us more closely in the future to so that discrepancies do not creep in again.
As employers and pension providers we recognise that you will have employees and pensioners contacting you for advice on what the revised notice of coding means for them. The numbers of inaccurate codes should be minimised going forward which will help and for any remaining enquiries we are not asking you to respond beyond providing the reassurance that this note gives about the problems being understood and addressed. Where an employee or pensioner does contact you we would be grateful if you could:
- Reassure them that the revised notice of coding will not take effect until the first payment after 5 April and HMRC will be reviewing and correcting codes in the meantime
- Ask them to look at the information on our website which explains how a PAYE code is operated
- Ask them to telephone us on the number of their Coding Notice or 0845 3000 627 if they have any more concerns or wish to talk to us to resolve the problem.
The employer copy of the PAYE coding, form P9, will be issued in the normal way as we approach the new tax year. If you do not receive a P9 for an employee or pensioner, you should continue to operate the existing PAYE code from the current year into next year in line with existing guidance. We do recognise that you may receive a higher number of forms P9 this year but we will be aiming to keep these to a minimum.
We are sorry for any extra work this puts you to in responding to queries but hope you will appreciate that correcting the basic data held between our systems will result in a more accurate and efficient service in the future for customers, employers and HMRC.”
The above letter refers to ‘areas which could have caused an incorrect tax code to be sent”. Information about the main causes of the problems were later released on HMRC’s website, as follows:
“We have been working hard to identify situations where customers could receive an incorrect Coding Notice and have identified three key situations where this may occur. These are where:
- a previous employment stopped some time ago but our system has not picked this up and a Coding Notice has been sent for that employment
- two notices have been sent for the same employment
- the code BR (basic tax) or DO (higher rate tax) has been given for an employment or pension for the first time
We are looking to correct as many of these discrepancies as possible well in advance of the new tax year and we are doing all we can to ensure no one pays too much tax from April.”
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