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HMRC 2017-18 in-year adjustment error

10th May 2018
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A PAYE client had an in-year adjustment to his 2017-18 tax code as a result of changes in expenses. When HMRC processed the 2018 Tax Return HMRC issued a SA302 stating the adjustment was for an earlier year. I've spoken to the ADL and been told there is a 'technical' problem which has resulted in HMRC erroneously converting in-year adjustments to underpayments for previous years. The officer I spoke to said this is a wide-spread problem (possibly because 2017-18 was the first year of dynamic coding). The officer told me that HMRC's solution is to wait for agents to report individual clients to HMRC. HMRC then adjust the return to what it was originally filed by the agent. The agent then has to wait 48 hours then contact HMRC again to request the refund.

I was unaware of this 'technical' problem and am therefore posting to bring it to the attention of the wider agent community.

I feel HMRC's 'solution' is inadequate. HMRC should be proactive and fix the problem before the agent reports it. And what about unrepresented taxpayers?

Replies (10)

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By jivebunny
11th May 2018 09:52

If you are using HMRC's online tax return and an adjustment of this type appears you have the option to say no and explain that it is in fact an in year adjustment.
A call to the agent line confirmed this was the acceptable course of action.
Jivebunny

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Replying to jivebunny:
Morph
By kevinringer
11th May 2018 10:16

Indeed but HMRC officers have to correct it so I guess if you said 'no' without speaking to HMRC they would reinstate it. The point here though is that HMRC have made yet another clanger and their 'workaround' is not sufficient because HMRC are not actively identifying these cases.

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Replying to kevinringer:
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By cmkessell
04th Jan 2019 17:09

kevinringer wrote:

I guess if you said 'no' without speaking to HMRC they would reinstate it.

I can confirm this. I changed the figure in my wife's tax return to zero, yet the tax calculation letter received from HMRC today included the erroneous figure again. We've just phoned them to hopefully fix the error.

(The bizarre thing is that HMRC has already issued a tax refund based on the corrected return, and the figures in the online SA account appear to be correct too, yet the tax calculation letter has the 'underpaid tax' error resulting in a completely different calculation! What a confusing mess.)

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By Michael Davies
11th May 2018 09:53

This beggars belief !

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By Branski
07th Jun 2018 09:28

Just had the same thing. When 2017/18 SA302 came out spoke to HMRC and was told there is no problem with in year adjustments. Attempted to explain why there is a problem and was then told it was the client's fault for not getting in touch to query the in year adjustment during the year?! It then got a bit heated as officer did not acknowledge there was a problem and the only way to change would be to put in a formal letter to challenge! Could not believe this can't be sorted out over the phone. Not sure if I should phone Agent line again and hope to get someone who can help?

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By aleshasoba
08th Nov 2018 08:49

Just had exactly this problem so it's still not sorted. When I was looking for the earlier unpaid tax evidence that was being added on to tax due on the self assessment return, the PAYE coding notice confirmed it was an estimate of tax that would be short in the current year.

Great so do the self assessment return to get the correct amount of tax due and then add on some more. Unbelievable !

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By Polymath1
16th Nov 2018 19:13

Both my wife and I had this problem .... and I suspect it is a widespread issue which most people will not understand.
Our common experience is:
1. Tax code for 2017-18 contained an 'in year adjustment'.
2. In the online self assessment form this amount was (incorrectly) included as 'Underpaid Tax for earlier years', with the option to change it if not correct.
3. The self assessment form was duly amended by selecting 'No' and entering 0 (we had no tax outstanding for previous years).
4. After submitting the return we received revised assessments.... which re-instated the erroneous 'Underpaid tax for previous years'!
5. A call to HMRC was successful in correcting the error. The Officer we spoke to was on the ball, apologized for the error and undertook to report back to her manager.
It is appalling that taxpayers are being expected to 'correct' this systemic glitch. They will see the number in their tax code letter and assume the pre-populated self assessment form is correct. (My wife, a teacher, did precisely that!) Just how widespread is this problem? Please add to the discussion if you have had a similar experience?

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By cmkessell
26th Dec 2018 15:53

Glad I found this thread. I'm an "unrepresented taxpayer" and just spotted that an in-year tax code adjustment has been converted into a phantom £500 underpayment for an earlier year in my self-assessment tax return.

I was very tempted to leave the figure alone on the assumption that HMRC knew what they were doing. I'll now reset it to zero, add a few words of justification in the comment box, and hope they accept it.

Thanks for highlighting this issue.

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Replying to cmkessell:
Morph
By kevinringer
26th Dec 2018 16:05

You would expect HMRC as the UK tax authority to know what it is doing, but as an accountant who has dealt with HMRC for 30+ years I can tell you that they do not know what they are doing. They can't even calculate tax correctly. HMRC are well aware of the problem generating phantom underpayments for previous years but HMRC are doing nothing about it and rely on accountants and taxpayers to challenge the figures. How can HMRC get away with such unprofessional practice? Why are our MPs not holding HMRC to account?

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By Jo Nokes
04th Jan 2019 12:51

Kevin, I could not agree more. I've just received an SA302 with the same issue. Good to know I can check on this site to find I am not alone

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