HMRC said it had no evidence of a widespread problem but advised taxpayers to check their codes carefully.
Andrew Hubbard, of the Chartered Institute of Taxation (CIOT) commented: “Most people on PAYE are used to assuming that what the taxman sends them is correct, but this year, many of them are being given wrong information, and unless they spot it and tell HMRC, their employer will receive the wrong information too. They could get a nasty shock when they open their April pay packet and see it is as much as a hundred pounds lighter than they are expecting”.
It is not clear how many incorrect tax codes have been sent out, or may be distributed in the coming weeks. The CIOT said the scale of the problem might be indicated by the fact that this year about 25 million coding notices are being distributed, which is about twice last year's number.
AccountingWEB.co.uk tax editor Rebecca Benneyworth explained: “The new PAYE computer system launched in July (called NPS) is in play for the first time for the code run. The big difference is that the master file system is organised by employee name rather than by employer, allowing HMRC to marry up records of people who have more then one job/pension etc.
“Ultimately this will be much more efficient as it will allow accurate issue of tax allowances where someone has several part time jobs and wants part of their allowances transferred to a second job. However, this is the first year, and the system has collated data from P35's, some of which is a bit suspect. So HMRC are already warning that this year there will be extra code notices and there may be some bugs that are coming through due to duplicate records. Their advice is to wait for a bit and see whether any more notices come through - which means that the systems have reconciled the issue”.
For those seeking more detailed guidance, AccountingWEB.co.uk will run an update on the situation with the latest advice from HMRC in February.