HMRC system issuing wrong tax codes, says tax body

Many could be paying more tax than they need, says Chartered Institute of Taxation

Many may have received the wrong tax code

HM Revenue & Customs has sent the wrong tax codes to a number of people in the UK because of a fault with new IT systems, according to the Chartered Institute of Taxation.

Tax codes identify which tax bracket a person will be in for the coming year. Taxpayers have a small window of time in which to identify and point out any errors before employers are informed of their employees’ tax codes in March.

But a move to a new PAYE system means the HMRC database appears to have lost information it holds about people leaving jobs and as a result is combining taxpayers’ current employment records with old data. It is concluding that they have two jobs, thus putting them in a higher tax bracket, the institute said in a release today.

Andrew Hubbard, president of the Chartered Institute of Taxation, said most people on PAYE are used to assuming that what the taxman sends them is correct.

"Many file away coding notices without even bothering to check them," he said.

"But this year, many of them are being given wrong information, and unless they spot it and tell HMRC, their employer will receive the wrong information too, and they could get a nasty shock when they open their April pay packet and see it is as much as a hundred pounds lighter than they are expecting."

Hubbard is calling HMRC to publicly state the extent of the problem and what it is doing to tackle it, and mount a major publicity campaign to make taxpayers aware of the problem.

A spokesman for HMRC insisted the IT behind the new system is working as it should, but added there were cases where some people received an incorrect coding notice because of a discrepancy with records.

"Anyone in this position should check their code using the guidance included with the code and on our web site. If they cannot resolve their query they should call HMRC to make sure the right tax code is applied. We apologise for any inconvenience caused," said the spokesman.