RTI & tax code notices

RTI & tax code notices

Didn't find your answer?

Hi

You will all be familiar with this situation, I'm sure: A client with PAYE income has a second source of income, say rental income, and therefore has to submit a TR. The box on the TR tax calculation of PTP to take the tax via PAYE is unchecked, and he pays the tax arising from the SA (essentially the tax the RI profit) separately every year. A few weeks after the TR is submitted he gets a PAYE coding notice reducing his PA because of profits on RI !

Firstly - what is the point of informing HMRC that the tax should not be deducted via PAYE if they alter his code regardless?

Secondly - Under the present regime If we are also running his payroll if for instance he is a co. director, I would ignore the coding notice and continue to use the full PA. Under RTI one assumes this will not be possible and either I or the client will have to contact HMRC to get his code corrected? Yet another chunk of unbillable time, I've no doubt.

Roger

Replies (4)

Please login or register to join the discussion.

Tom McClelland
By TomMcClelland
11th Feb 2013 22:34

HMRC ought to detect ignoring of coding notice

Yes, HMRC gets enough information in the FPS to be able to tell that the payroll processor has not applied a coding notice. So this may be flagged as a compliance issue and it is probably a good idea to encourage clients to challenge incorrect notices when they appear.

On the other hand I have a suspicion that once RTI is running HMRC will be utterly overwhelmed in the tidal wave of compliance issues of different kinds that they are able to detect, to the extent that following up anything more than a tiny fraction of them will be quite impossible.

Thanks (1)
avatar
By RogerMT
12th Feb 2013 09:11

Good point, Tom. A nightmare awaits if you ask me!

Thanks (0)
avatar
By AJBetts77
12th Feb 2013 17:49

RTI & tax code notices

I have a similar issue, where the coding has been reduced for expenses that are counter claimed on the TR.  I intend to file a s 336 claim, as suggested by other helpful posters, however, this may take time etc.  So I was worried about the RTI issues as well.  Seems to me that HMRC is never going to be able to handle all this data anyway, and is going to create more work for everyone - so much for cutting red tape for small businesses - thanks HMRC.

Thanks (0)
avatar
By RogerMT
13th Feb 2013 09:22

@AJBetts

Indeed, RTI it is yet another example of HMRC's attritional attitude to what it euphemistically calls "customers."  I am old enough to recall the days when the "Inland Revenue" was a helpful and (almost) friendly agency!

As for your situation re client's expenses, one wonders why his employer does not apply for a P11D dispensation?

Thanks (0)