Problem with tax collected through codes

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I wonder if this is happening to other people - I have 3 or 4 instances of this and another this morning - a client with a smallish self-assessment underpayment (under £500) so when filing her return I left it to be collected via PAYE code as I have before (box 2 page TR6 not ticked), but she has just got a statement to pay HMRC. I have no idea why they haven't coded it - they have in the past for her. Any ideas?

Also is there anyway to fix other than the obvious - phone HMRC and waste ages on hold?

 

Replies (17)

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By Matrix
22nd Jan 2021 10:32

If you filed before 30 December then it is very odd, sounds like HMRC error.

You can call but I doubt they will adjust the tax code now so your client may have to pay the tax.

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By Paul Crowley
22nd Jan 2021 10:41

There is a time limit
File after the time limit and tax is payable

I NEVER get a client coded
Just makes more work as the liability jumps a year

Then client forgets and complains that HMRC get the coding wrong

And the worker fails to notice the liability that needs to be entered to make the tax right cos he did not look at the coding notice

Just to much faff

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By Truthsayer
22nd Jan 2021 10:34

Just tell the client to pay it. Also, I thoroughly recommend routinely ticking boxes 2 & 3 on page TR6 in future, as collecting through tax codes just results in error and trouble like this. By the way, did you submit these returns this month? If so, you have missed the deadline for tax being collected through PAYE code, for which SATR's had to be submitted 30 December.

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By mbee1
22nd Jan 2021 10:48

If the Return was filed by 30 December and t is capable of being collected through the code then you'll have to call them. Provided the criteria is satisfied they will update the record and you can do this right up until the end of the tax year.

The problem you'll have is getting through to them - 8am in the morning is the best time.

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Kitten
By Hazel Accounts
22nd Jan 2021 11:12

Thanks to above replies:
The returns were submitted before end of December so that's not the issue.
Yes - I prefer not to code but client wants to and has done in previous years so understands how it works
Also due to covid and lower income etc the client doesn't really have the funds to pay now and this seemed easier than applying for time to pay etc

Guess I will have to brave the phone wait musak

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Replying to Hazel Accounts:
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By Youareatit
22nd Jan 2021 11:30

[quote=Hazel Accounts. ''Guess I will have to brave the phone wait musak''

Wouldnt be so bad if it wasnt that wrist slitting dirge they play. I had to hang up after 1 1/2 hours on hold to another organisation the other day as the same dirge was messing with my head.

Worst thing as well is if you trun the volume down, you get excited that they have answered your call but its just that annoying woman saying that the call is important and blur blur blur.

Perhaps try 8am Monday?

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Replying to Hazel Accounts:
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By frankfx
22nd Jan 2021 16:46

Are you going to charge client for hearing loss and distraction?

Faff is costly, and HMRC have burdened us.

That is a consequence of client instructions.

Why not let client endure the faffing.

Set his alarm and get dialing .

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By Not Anonymous
22nd Jan 2021 11:25

Hazel Accounts wrote:

I wonder if this is happening to other people - I have 3 or 4 instances of this and another this morning - a client with a smallish self-assessment underpayment (under £500) so when filing her return I left it to be collected via PAYE code as I have before (box 2 page TR6 not ticked), but she has just got a statement to pay HMRC. I have no idea why they haven't coded it - they have in the past for her. Any ideas?

Also is there anyway to fix other than the obvious - phone HMRC and waste ages on hold?

 

Does the amount meet HMRC rules for coding out?

If income had reduced during 2020/21 then it may be rejected if HMRC's systems don't classify it as being codeable.

For example if the normal PAYE tax for 2021/22 is estimated as £400 then they won't code out £500 from a Self Assessment return as it is more than double the normal PAYE tax.

But that £400 calculation for 2021/22 will normally be based on the Real Time Information data at December 2020/January 2021 so if that shows pay as lower than normal (furlough?) and it will be higher in 2021/22 you may be able to get the £500 coded once a more upto date estimate of expected 2021/22 earnings is supplied.

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Replying to Not Anonymous:
Kitten
By Hazel Accounts
22nd Jan 2021 13:19

Hmm, that might be the issue with this one - her salary in my client co. is unchanged but last tax year she also another job but (thanks to covid) not any more so her PAYE tax will have dropped in 2020/21......

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Replying to Hazel Accounts:
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By Not Anonymous
22nd Jan 2021 14:54

If it is particularly important to this client then they could use their Personal Tax Account to check the estimated salary/pay used in calculating the 2021/22 tax code and update it if appropriate.

But it would still need separate contact to move the tax from Self Assessment back to PAYE.

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By K81
22nd Jan 2021 11:26

HMRC won't code if the tax owed doubles the PAYE tax that will be collected. This has been input into computer programming & cannot be over ridden.

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Replying to K81:
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By mbee1
22nd Jan 2021 14:10

K81 wrote:

HMRC won't code if the tax owed doubles the PAYE tax that will be collected. This has been input into computer programming & cannot be over ridden.


It can be over ridden if you think the pay will change. They can revise the estimate for 2021/22 income manually but it cannot be coded out if it more than doubles the estimated liability.
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By K81
22nd Jan 2021 11:26

HMRC won't code if the tax owed doubles the PAYE tax that will be collected. This has been input into computer programming & cannot be over ridden.

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By frankfx
22nd Jan 2021 16:48

The comments on this thread support the no code out cohort.

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Replying to frankfx:
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By Not Anonymous
22nd Jan 2021 17:48

frankfx wrote:

The comments on this thread support the no code out cohort.

Very true, and much less scope for confusion and problems further down the line.

But some clients will see what is effectively a 14 month interest free loan as very attractive.

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Replying to Not Anonymous:
Kitten
By Hazel Accounts
25th Jan 2021 12:38

Yes they do and so whilst I realise it can complicate matters I feel I can't just tell some of them they must pay now rather than collect via code - some of my client's are fully aware of the option and it does at least make them get their paperwork in early to ensure filed before Christmas! BTW - for the case in question in my OP above she has agreed to pay now.

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By deborahkelledy
25th Jan 2021 14:22

I also submitted a Tax Return for a client before 30.12.2020 asking for the tax to be coded out. It wasn't and the client received a statement. After holding for 45 minutes on the phone to HMRC to speak to someone, they amended it, and said they didn't know why it hadn't automatically been coded out as the salary was high enough to take it. Very frustrating.

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