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Can HMRC amend a tax code with no explanation?

A client has questioned why one of her employees has an amended tax code of S752L Week 1 Bases.

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A client has questioned why one of her employees has an amended tax code of S752L Week 1 Basis.  The employee called HMRC to say that he only has 1 employment, receives no other benefits from employer but wasn't given any explanation as to why his tax code has changed.  He has not received any letters from HMRC to his private address.  I can only assume that it is because the full payroll for 2020/21 has to be resubmitted to HMRC.  The employees had been TUPED from sole trader payroll to Ltd Company payroll month 4 of  2020/21 with their details being added as existing employee rather than new employee, however no other employees have been affected.  Difficult as due to ID &V HMRC will only speak to employee?

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Scooby
By gainsborough
15th Jul 2021 18:08

Employee should just ask HMRC to tell him the items in his code.

There may be investment income included in the code if no other employment or benefits or tax underpaid from an earlier year? Bear in mind he may not want his employer to know these details but he should at least be able to confirm whether correct.

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the sea otter
By memyself-eye
15th Jul 2021 18:51

yes is the answer - like the NKVD, they can 'alter' you at at any time, any place any where.

Beware....

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Replying to memyself-eye:
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By Hugo Fair
15th Jul 2021 20:52

True ... but they are meant to send you (the taxpayer) a P2 (Your tax code notice) - with a breakdown of the figures/assumptions used to end up with the new tax code (plus notes of limited explanation).
This is not just 'for info', but so as to enable (or officially 'encourage') taxpayer to contact HMRC and advise them of any of those elements that are wrong.
In my experience, they will usually agree the new tax code during the call and send out a revised P2 within a couple of weeks or so (but probably longer now).

FWIW here are some points worth bearing in mind if the Tax code is S752L/Wk1:
* HMRC have got the employee's main address as being in Scotland - so if this isn't true the correct address needs to be notified ASAP.
* The Wk1 basis suggests that HMRC are in the process of trying to resolve this person's records (as non-cumulative is usually a 'holding' position).
* The reduced PA value can be for an extremely wide range of reasons - not just other employments, but other taxable income (which can include some types of benefit and/or pensions, as well as newly discovered BiKs from 2 or 3 years ago), or even an amount of underpaid tax from previous tax years.

So I'd recommend taxpayer to call HMRC (it's not the responsibility of employer to do so) - after initially going to her/his PTA (which may provide some of the background data and, I believe, allows the 'corrections' to be submitted there).

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By Not Anonymous
15th Jul 2021 23:31

"* The reduced PA value can be for an extremely wide range of reasons - not just other employments, but other taxable income (which can include some types of benefit and/or pensions, as well as newly discovered BiKs from 2 or 3 years ago), or even an amount of underpaid tax from previous tax years"

There is no reduced PA in this code, it would be a T suffix (or K prefix) if there was reduced PA.

The make up of the tax code allowances and deductions are easily checked by the op on their Personal Tax Account

Pretty sure HMRC no longer issue a P2 notice for every tax code change so it may be the employee hasn't received anything. There is reference to this on the LITRG website

https://www.litrg.org.uk/tax-guides/employment/how-do-i-check-my-coding-...

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Replying to Not Anonymous:
By SteveHa
16th Jul 2021 09:10

Not Anonymous wrote:

There is no reduced PA in this code, it would be a T suffix (or K prefix) if there was reduced PA.

I think Hugo was referring to PA being reduced by a deduction of something else, in which case an L suffix would be entirely appropriate. T suffix is used where HMRC don't want automatic changes applied (such as budget increase), and K codes are only issued where there are net negative allowances.

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Replying to SteveHa:
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By Not Anonymous
16th Jul 2021 09:33

SteveHa wrote:

Not Anonymous wrote:

There is no reduced PA in this code, it would be a T suffix (or K prefix) if there was reduced PA.

I think Hugo was referring to PA being reduced by a deduction of something else, in which case an L suffix would be entirely appropriate. T suffix is used where HMRC don't want automatic changes applied (such as budget increase), and K codes are only issued where there are net negative allowances.

There is a difference between Personal Allowance and tax code allowances.

Where the Personal Allowance itself is not reduced then an L (or K) code suffix could be used, subject to other rules, but if the Personal Allowance itself was reduced then a T (or K) suffix would always be used.

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Replying to SteveHa:
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By Hugo Fair
16th Jul 2021 11:38

Thanks, Steve ... and you're wholly correct.
My wording was sloppy (lesson: don't start posting at end of a day in hospital), but I indeed meant what you say - basically I was referring to the numerical component of the tax code (or the code for 'free pay' for those who remember manual calcs)!

And Not Anon is of course correct ... in that PA is indeed but one of the inputs to the calc of that number. However that doesn't negate my point that the number can decrease for many reasons other than a second concurrent employment.

Finally, although HMRC keep changing their stated policy on the issue of P2 notices, it is my experience that they still do in at least the vast majority of cases. But, as I said, the recommended way forward is for taxpayer to visit her/his PTA and after viewing the details try to correct any errors ... with a backstop (if that doesn't work or the taxpayer cannot access their PTA) of 'phoning HMRC.

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RLI
By lionofludesch
15th Jul 2021 23:35

HMRC might send a P2 but the explanations of the entries are vague to say the least.

I got one myself recently. It included no personal allowance. No explanation for that. Fortunately, I used to be an accountant and I can guess that my personal allowance has been allocated to my non-existant self employment. To add to the errors, the pension company has omitted the month 1 flag and I'm currently paying three times the correct tax.

It'll sort itself eventually but I shouldn't have to guess how they arrived at this new code.

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By neiltonks
16th Jul 2021 11:16

If the employee has access to their HMRC online Personal tax Account, the information on there might help clarify things and can be quicker than calling HMRC. If they don't have access, they should sign up - it's usually not a difficult process these days.

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7om
By Tom 7000
19th Jul 2021 11:06

They can change it to what they want
Its none of the employers business the individuals tax affairs. Just run the code. If the employee wants it changed he can call HMRC and queue for 2 hrs... hah!

Thanks (1)
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By Mike Nicholas
19th Jul 2021 13:10

"I can only assume that it is because the full payroll for 2020/21 has to be resubmitted to HMRC. "
The meaning here is somewhat unclear. What is meant?

"The employees had been TUPED from sole trader payroll to Ltd Company payroll month 4 of 2020/21 with their details being added as existing employee rather than new employee..."
Was there a separate PAYE scheme for both the sole payroll and for the Ltd company payroll?

It occurs to me something was not done wholly correctly in the transfer which might have affected how HMRC's system has functioned.

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