MP uncovers £1.2bn P14 backlog

Posted by John Stokdyk PM | on Wed, 26/01/2011 - 17:46 5794 9 comments

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.

Continued...

M P Discovers !

S Greig | Thu, 27/01/2011 - 09:13 | Permalink

£1.2m or £1.2b?

£1.2bn - sorry, it's been a bad week for stupid typos

John Stokdyk | Thu, 27/01/2011 - 13:36 | Permalink

And they're all my fault so far. Thanks for pointing out the error and apologies to anyone who might have been misled by the error.

I see that HMRC

pauljohnston | Fri, 28/01/2011 - 13:20 | Permalink

asks for people to write to them. So who is going to read these letters. Based on us accountants feedback there will be along wait

P14 Problems

Peter Tucker | Fri, 28/01/2011 - 13:50 | Permalink

Interesting to note that HMRC comment in the 2009 /2010 NI Accounts document, published in January 2011, that a cause of the inability to match is the fact that Employers and Payrolls do not send HMRC "complete" information.

In view of the fact that HMRC insist on electronic communication, and that all PAYE electronic communication must meet the HMRC Data Quality Standard, it is difficult to see how anyone other than HMRC can be blamed.

And to think

PUREaccountants | Mon, 31/01/2011 - 10:52 | Permalink

That they want to run UK payroll themselves, good God, it'll be more than just unallocated payments. I really do wish that HMRC were properly chastised for their own incompetencies. If we were to run our businesses like this we'd all go bust!

Deficiency Notices solve it all do they?

bassett1 | Mon, 31/01/2011 - 13:16 | Permalink

Nice of HMRC to reassure people via the posting on their website that they will always be told that they have a gap in their NICs record that they can then address. Remember from 1996 - 2002 HMRC accidently stopped sending out deficiency notices whilst the new NI system NIRS2 was being stabilised, as the report to generate them was inadvertently turned off. This caused a huge exercise to be undertaken by HMRC and DWP to review records of thousands of individuals who had already retired, possibly with flawed NICs records. Now deficiency notices have been restored they still cause employers problems each year as many go out indicating that NICs have been credited and yet the employer's year end return has, as has already been pointed out in these postings, been successfully validated as meeting HMRC’s quality standard and ready for posting from 19th May. Either there is something wrong with the validations or with HMRC’s internal processes but the net result is that employers are wrongly blamed and employee relations are damaged when HMRC insists to callers to their helplines that it is the employer who was at fault.

Hang on though

Anthony123 | Mon, 31/01/2011 - 20:02 | Permalink

Current rules are 30 years' contributions buy you full state pension.

How many people are aware that government is currently in process of deciding whether to raise state pension age again, for people born from 1953 onwards? So say you are retiring at 66 - that gives you 50 years to accumulate 30 years of contributions. And chances are you will actually be waiting till 67, 68 or older. You can live with HMRC losing a few years then - who is really ever going to need to buy extra years now too?

I spoke to 2 women last week a few months apart in age and it would appear under these proposed new rules they will draw state pension nearly 2 years apart.

I discovered at the age of 48 I had "fully" contributed, so actually it annoys me far more that I'll be paying out as long as I remain in work for - well - nothing. It matters not from now on if HMRC reconcile my contributions. (I was unaware for example of "juvenile" contributions which apparently accounted for the years before I started work at 20. )

While Hanging On

Peter Tucker | Mon, 31/01/2011 - 22:12 | Permalink

Consider the possibility that there are further or additional changes to State Benefits.

Would it not be an excellent idea that if one had paid National Insurance Contributions, ( or Income Tax ) that these paymenst were credited to your particular HMRC Computer Record, rather than just being held in a suspense account, which is growing year on year without any sign that it will be cleared?

I will declare an interest. If I have paid, I want the fact to be acknowledged and my account credited with my payments and I believe that HMRC have been given a considerable sum of Public Funds to do just that.

Maybe I am missing something?

HMRC Records

weaversmiths | Tue, 01/02/2011 - 15:30 | Permalink

Everyone should query the forecast of State Pension they are expected to receive. I am sure a lot of people just accept what is sent to them. I was told I would be getting, roughly, one third of the state pension despite having paid a full stamp for my whole working life except for 6 weeks in a temporary job in 1964. DSS said that I had always paid a married womans stamp which was not true. There was prolonged negotiation and, in an attempt to solve matters they said that I would be awarded my Pension by virtue of my second husband's contributions - I grabbed at this very quickly as the fellow never paid a cent in NI in his life and I hadn't seen him for years - they obviously had the wrong records. I actually lose about £1.50 per week of the full State Pension but, as I did not have all my payslips since April 1956 I did not have a leg to stand on as I had no actual proof even though actually employed for most of the years. Does anybody keep all payslips for that many years? The whole of the recording of NI is a total shambles.

I often use my case as an example when my clients approach State Pension age and are getting less than they expected.

TheAncientOne