MP uncovers £1.2bn P14 backlog
HMRC is facing another media onslaught over its management of PAYE records after an MP released figures showing that more than 9m National Insurance payments going back to 2004-05 have not been credited to employees' records.
MP Ian Liddell-Grainger, chairman of the All Party Parliamentary Group on Taxation, released figures from a parliamentary answer showing that the total for unmatched contributions amounts to more than £1.2bn.
Liddell-Grainger said HMRC is “sitting on a national insurance time bomb” and warned affected taxpayers that they could face problems claiming their pensions if the backlog is not resolved.
The source of the problem stems from errors on P14 forms submitted by employers every May to log the PAYE and National Insurance Contributions for each employee. If HMRC encounters an error, for example if the taxpayer’s name and address does not match their National Insurance number, it should instruct the employer to correct the mistake.
But administrative corners appear to have been cut in this area as HMRC’s IT and PAYE teams wrestled with the workload arising from the transition to its new National Insurance and Pensions System (NPS).
In response to media coverage, HMRC posted a notice on its website explaining that claims the department had lost billions in pensions contributions was "not true".
HMRC explained that NICs that cannot be matched to specific records are held in a suspense account until such time they can be allocated correctly.