Policy change for coding out?????
Having submitted quite a few 2008 tax returns (which wasn't without its problems thanks to our software having numerous 'issues') I have received the updated statement for one of my clients which not only has the July 2008 POA coded out but all of 2009's. The liability was £2,942.71.
It would appear that there is a new question on the 2007/08 tax return, on page 6 - If you owe tax for 2007/08 & have a PAYE tax code, we will try to collect tax due (up to £2,000) through your tax code for 2009-10, unless you put an 'x' in the box. This INCLUDES any outstanding POA's. So my clients July POA has been coded into 2010. This crazy move means that the 'tax outstanding' is effectively nil (We all know that isnt the case) & HMRC have cancelled her 2008/09 POA's!!!!!!
If you map this forward to 2012. It means that instead of paying £1,600 every 6 months, she will pay around £4,500 every 2 years, until her source of PAYE ceases, then coding out must stop & if she is still in the same position will owe nearly £10k in 'catch-up' payments.
Having spoken to a tax specialist & HMRC they have confirmed that this year the policy has changed, but once everyone starts querying their bizarre statements & PAYE codes, how long will it be before they reverse their decision - moving us into even more complications? I can’t see that everyone at HMRC will understand the change, our software providers definitely don’t & we are faced with having to manually adjust all of our client accounts.