New PAYE tax codes system causes confusion

New PAYE tax codes system causes confusion

The wrong tax has been paid by some employers after the introduction of a new PAYE system by HM Revenue & Customs

The news follows criticism of the 25% pay rise handed out to HMRC chief
information officer Steve Lamey after the department had a mixed bag of results
in the performance of its IT systems in the last 12 months, as well as issuing
an apology for sending out incorrect tax demand notices to companies.

The latest issue concerns HMRC’s new system for handling online PAYE tax code
revisions. Some payroll bureaux and businesses have missed out on details of
changes to tax code revisions, which has resulted in employees paying over or
under the correct amount of tax.

Alan McCann, director of tax at DTE, said his payroll staff have been dealing
with correcting tax code details for some clients, and is upset about the amount
of time required to make the amendments.

Paul Aplin, tax partner at AC Mole & Sons, said that his firm had been
notified of incorrect tax codes for employees from a number of their clients.
‘My concern is that employees wouldn’t know what to check; how many have not
noticed?’

An HMRC spokesman said some businesses and advisers were unaware of how to
access PAYE notices and reminders through the internet, and that guidance is
available online.

HMRC also apologised for incorrect tax demand notices sent out following a
mix-up over a discount for filing PAYE forms online. The businesses and
individuals in questions were taking advantage of a £250 reduction in their
2005/06 tax payment for filing their 2004/05 returns online.

HMRC said incorrect notices had been sent because of errors on employer’s
annual return forms and that anyone disputing the payment should call the number
on the letter.

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