Freelance tax writer
Share this content
AIA
Tags:

HMRC apologises for P800 errors

by
9th Oct 2014
Freelance tax writer
Share this content

HMRC has apologised for worry and inconvenience caused to taxpayers by the issue of incorrect tax statements and cheques since mid-September. In a statement published this afternoon HMRC said the problem affected only a small proportion of the P800 statements issued in this period, but the department’s own note to stakeholders had suggested that “several thousands of employees may be affected”.

This afternoon’s statement said: “HMRC is urgently investigating this matter to resolve the issue. In the meantime, customers who think their 2013/14 P800 may be wrong should contact our helplines for further advice before making repayments or cashing cheques. We are sorry for any worry or inconvenience caused.”

The Association of Taxation Technicians (ATT) called this afternoon for an urgent review of the Real Time Information (RTI) system and a tax director at KPMG called for urgent investment in HMRC systems.

Today’s “alarming” revelation underscores the need for collaboration with external stakeholders who have a vested interest in the success of RTI, said ATT president Natalie Miller.

HMRC was reported to have “stopped” issuing income tax refunds in these cases after an email sent to employers, professional bodies and other stakeholders revealed that end of year reconciliations for thousands of taxpayers had been calculated wrongly.

An HMRC spokesman told AccountingWEB this morning, however, that the process was “continuing as usual”. The note, passed to AccountingWEB today and reproduced here, had advised employers that an employee who queries a P800 calculation should be advised “not to repay” any underpayment shown on the P800 and not to cash any payable order they may have received. HMRC aimed to “resolve the matter and issue a revised P800 to the employee in the next 6-8 weeks”.

‘Real and serious practical problems’

Miller said: “We have been drawing HMRC’s attention to the quirks and complexities of RTI in meetings and correspondence from its inception. We have also highlighted the significant burdens it places on employers and agents. What we are seeing now are real and serious practical problems for possibly many thousands of employees at a time when building confidence in the system is crucial. Some of those difficulties might have been avoided if HMRC had heeded advice from ATT and similar bodies at an early stage.

“In light of this latest revelation, we are calling for an urgent review of the RTI system to ensure that it is fit for purpose. This is essential because every employer and employee is entitled to know that PAYE is being dealt with properly. It is doubly important because the RTI system underpins the universal credit system that is being rolled out by the Department for Work and Pensions to replace certain state benefits.”

Miller added that if, as HMRC’s reported comments suggest, the problem arose because employers had failed to send in final payment statements for 2013/14, that suggested two things.

“Firstly, that the process is simply too complex for employers to understand. Secondly, that either HMRC know the information to be incomplete and are failing to address this before placing reliance on the information, or HMRC do not know the information is incomplete, which raises the equally worrying prospect that the system cannot identify when important information is missing.”

‘Significant and urgent investment’

Steve Wade, tax director at KPMG in the UK, said that on the whole HMRC had done an “excellent job” in getting nearly all employers reporting information in real time. “Unfortunately there are some fairly major issues with the IT and HMRC systems and fixing them requires significant investment by the tax authorities,” he said.

HMRC systems were “not designed to deal with all the complexities of PAYE”, Wade added. “There needs to be some significant and urgent investment in the processing and back end software systems at HMRC which collect and process this data to generate the operational efficiencies envisaged when the whole RTI initiative was conceived.  As RTI is an integral element of delivering the universal credit, it is crucial that it operates effectively.”

Wade called for “more and quicker feedback” to employers’ agents and software developers on issues as they arise.

Patience ‘wearing thin’

The BBC News website quoted Jason Piper, technical manager at ACCA, as saying: “Yet again, we are seeing errors in the operation of PAYE, and HMRC must learn the lessons from earlier problems and be transparent and accountable this time around.

“Public patience is wearing thin with government IT failures, and one like this which hits so close to home for taxpayers the length of the country, is bad news for a department trying to extend the reach of its powers into every aspect of our collective financial lives based on the power of its computer systems.”

Related articles:

Tags:

Replies (20)

Please login or register to join the discussion.

By Elaine Clark
09th Oct 2014 16:51

small proportion of the P800 statements

Can they clarify small? You'd hope HMRC could be very specific about how many otherwise how do you know which ones are right & which are wrong & how large a number "small" is? !!

Thanks (0)
Replying to Wanderer:
avatar
By Pens pusher
09th Oct 2014 21:28

Small proportion of P800 statements
Hmmmm, huge plus more equals small!

Thanks (0)
avatar
By Pens pusher
09th Oct 2014 21:27

HMRC apologises for P800 errors
An apology, can u have it signed? The Disaster this has trailing behind it is phenomenal. I just can't see them fixing the R.T.I problems, it's caused employers and employees panic from rather ruthless letters and in cases debt collectors turning up where reconciliation at hmrc end is not working! Overpayments of CIs tax paid is all over the place. EYUs do to accept R on tools and what is received at other end duplicates. I spend on average 4 working hours a day to HMRC and it's thoroughly depressing as it prevents actual income being earnt. It's us agents, and employers that are hit, but so is the tax system! All the legal liability is on employer even with hmrc system errors, even after call after call and technical
Advisors that do not have access to what we're being told to enter, they cannot see paye tools. If this carries on employers and agents will
Lose more income due to admin time that's unrecoverable and possibly lose clients who get frustrated with how long overpayment issues take as an example and our ever diminishing time to spend talking to and helping them, that's our job! lower taxes collected because were losing more and more time to achieve our daily commitments that earn our livelihoods! I really feel unhealthily spent by it and the way I have been made to feel when addressing my concerns has at times been horrid! I'm waiting in anticipation for some kind of hmrc correspondence confirming their [***] up! Ohhh And why do rti submission penalties kick in on 6th march 2015 a month before new year! Oh I forgot need some penalties to cover up the colossal amounts of money wasted! Rant over, thank you.

Thanks (1)
Replying to Tax Dragon:
avatar
By SimonP
13th Oct 2014 13:38

I am disgusted ...

... that a so-called professional could pen such illiterate garbage.

There may have been something useful in that 'rant' but it is lost amongst all the spelling and grammatical errors, which I abhor.

I do so wish that people would stop and think before deciding to post something and then, having made that conscious decision, stop and read through what has just been typed.

 

Pens pusher wrote:
An apology, can u have it signed? The Disaster this has trailing behind it is phenomenal. I just can't see them fixing the R.T.I problems, it's caused employers and employees panic from rather ruthless letters and in cases debt collectors turning up where reconciliation at hmrc end is not working! Overpayments of CIs tax paid is all over the place. EYUs do to accept R on tools and what is received at other end duplicates. I spend on average 4 working hours a day to HMRC and it's thoroughly depressing as it prevents actual income being earnt. It's us agents, and employers that are hit, but so is the tax system! All the legal liability is on employer even with hmrc system errors, even after call after call and technical Advisors that do not have access to what we're being told to enter, they cannot see paye tools. If this carries on employers and agents will Lose more income due to admin time that's unrecoverable and possibly lose clients who get frustrated with how long overpayment issues take as an example and our ever diminishing time to spend talking to and helping them, that's our job! lower taxes collected because were losing more and more time to achieve our daily commitments that earn our livelihoods! I really feel unhealthily spent by it and the way I have been made to feel when addressing my concerns has at times been horrid! I'm waiting in anticipation for some kind of hmrc correspondence confirming their [***] up! Ohhh And why do rti submission penalties kick in on 6th march 2015 a month before new year! Oh I forgot need some penalties to cover up the colossal amounts of money wasted! Rant over, thank you.
Thanks (3)
ghm
By TaxTeddy
10th Oct 2014 07:40

He who lives by the sword...

...dies by the sword.

Surely this is just a symptom of HMRC's over-reliance on systems and automation. My father in law who was an IBM pioneer in the 1950s was very fond of the maxim "garbage in equals garbage out" and this seems very relevant here.

The missing factor for HMRC seems to be the human element. I well recall the end of year clear down and coding exercises which we would perform manually when I was working in a Birmingham PAYE district in the late 1970s. Tedious maybe, but we were looking at each and every taxpayer record to see where an adjustment or review was required.

Clearly, such a manual process had errors but they were small. Now, with a systemic approach the human error is in the programming, extends to thousands of taxpayers and makes national headlines.

Sadly I don't see any way back - I think this will become the norm.

Thanks (1)
Euan's picture
By Euan MacLennan
10th Oct 2014 10:06

Who writes this guff for HMRC?

HMRC wrote:

In the meantime, customers who think their 2013/14 P800 may be wrong should contact our helplines for further advice before making repayments or cashing cheques.

In the meantime, if any taxpayers contact me for advice, I would advise them not to think that a tax calculation issued by the UK's tax authority could ever possibly be wrong, but to cash any cheque from HMRC immediately and wait for HMRC to sort out their problem, with the further advice not to spend the money in the meantime, just in case HMRC may have (shock! horror!) made a mistake.

Thanks (0)
avatar
By johnjenkins
10th Oct 2014 11:17

I have said

this before that if I know 100% what a clients' code number should be then I will use that rather than rely on HMRC. Am I legally bound using HMRC information knowing it to be wrong? This is self-assessment, but it would be interesting what the high court would make of it.

Thanks (0)
avatar
By abaco
13th Oct 2014 10:04

Help Themselves?

What this story tells us simply reinforces what most of us have seen in the past, which is HMRC cocking things up. How any government can justify enabling them to raid bank accounts is nothing short of incredible.

Thanks (0)
avatar
By AWebbie
13th Oct 2014 12:07

CONTACT THE HELPLINE?

The worst part of the HMRC advice is, "In the meantime, customers who think their 2013/14 P800 may be wrong should contact our helplines for further advice before making repayments or cashing cheques".  If the Customer is an OAP, he will probably be dead by the time he gets through.  No, I exaggerate.  The Agents' Helpline is fine, but for most others a 20 minute wait seems to be standard

Thanks (0)
avatar
By Moo
13th Oct 2014 12:13

P800 issues

These latest c*ck-ups apparently don't include the P800s and refund cheques that have been issued in error (because the self assessment and PAYE systems do not talk to each other) to people who are filing self assessment returns. I have been having to field those for months now, sometimes 5-6 in a weekend batch of post as greeted me last Monday.  Each one requires a phone call to HMRC to get them to set up the self assment/PAYE link manually and an email to the client to tell them to ignore the P800 and not to bank the cheque that generally came with it.  If the cheque has been banked then the tax return generally needs to be amended to take account of that, all frustrating useless work with no fee.

And can someone please explain to me the logic behind issuing P800s before the P11D filing deadline for the year - which bright little revenue bunny thought that would be a good idea?

Thanks (0)
avatar
By dgilmour51
13th Oct 2014 13:04

How dare they ?!

And if I apologise because I made an error due to their impenetrable and obfuscatory advice, in spite of taking the best care I can . . . I get fined just the same.
Although HMRC owe no duty of care whatsoever I begin to think it is time for the worm to turn.
Something needs to be done.

Thanks (0)
Replying to SXGuy:
avatar
By NYB
13th Oct 2014 14:30

Incorrect P800

I have mad an error nearly two years ago. a pure simple error, which is still on going. HMRC's regs allow for an error in theory but not in practice. I am awaiting a tribunal date. Quite stressful as I am a small sole trader. Lucky my husband is an accountant as he knows how to handle tribunals so I have some back up. So time consuming. I have said sorry and apologised but to no avail

Thanks (0)
avatar
By sallycox
13th Oct 2014 13:12

ATT Response

Well done, Natalie, for putting the views of ATT so succinctly. The views expressed seem to correlate precisely with those held by members of other 'bodies' and, clearly, AWeb contributors too.

HMRC still don't seem to realise that it is often the Agent community who 'get it in the neck' from their clients, whom they have to placate. 

Can they all be wrong? The answer to that is clearly 'no'.

Thanks (0)
avatar
By Ian McTernan CTA
13th Oct 2014 13:17

Tax Credits and RTI

Probably just as well they never decided to allow the tax credits section access to information held on the HMRC computers then....

Thanks (0)
avatar
By vitali2712
13th Oct 2014 14:11

The issue of incorrect P800 returns came as no shock to the majority of people working in the tax field. It seems now that the HMRC have had it made public by the papers due to insider whistleblowing that they feel the need to go in to full apology mode.

Something has been amiss with RTI since it's roll out over a year ago. Tax codes issued at basic or 40% rate, duplicate records, NI numbers missing digits, issues with filing, incorrect values on the RTI employer portal.

The usual line with HMRC is that the issue is 'small scale' yet they never reveal exact details of how many are affected, in the same way that they don't tell anyone when it's fixed or how they achieved this.

Even in the RTI annual review...what I commonly refer to as the HMRC back patting session, they praised how well it had all gone whereas serious issues were described as 'teething problems from a small percentage of employers' despite them still happening to this day and causing untold misery for agents and employers.

The most shocking statistic about RTI is that is has still not been signed off by any software/financial compliance firm. The reason being is that it would fail time and time again.

The real issue is that if we choose not to use RTI, we get fined. If we don't operate the incorrect codes, we get fined. If the RTI files are incorrect, the onus is on the employer to investigate and fix. Being at the mercy of the modern HMRC is not a fun experience.

RTI should have reshaped the way tax is dealt with at HMRC, instead it seems that they have tried to bolt it toghether from it's inception with existing processes and software which obviously don't work. Something as monumental as RTI required a clean slate, a new process from the ground up so that all departments would be aligned. Instead, it's been replaced by a process that is arguably setting things back, is unfriendly to users and gives no control or audit of what's happening to data.

 

 

Thanks (1)
avatar
By North East Accountant
14th Oct 2014 08:50

Self Assessment

What really annoys me is the issue of a P800 for a self assessment taxpayer.

Can they not stop issue of these?

Thanks (0)
avatar
By AndrewV12
14th Oct 2014 10:06

RTI still has teething troubles

When will problems (and related problems) with RTI cease, let me guess 2017. 

Thanks (0)
By Julian Stafford
14th Oct 2014 10:21

what's sauce for the goose.....

The general thread here is the gap between the standard of compliance that HMRC expects from taxpayers and the service quality that HMRC dishes out to us all.

With any major change, surely we are entitled to expect that the system or procedure should be operating effectively and accurately before they start wielding the big stick of compliance penalties and interest.

Thanks (1)
avatar
By childrenintouch
15th Oct 2014 16:48

HMRC's records are not up to date enough to cope with RTI

After 40 years in the Revenue I know that the computer systems are inadequate and records which were transferred to computer back in the 80s were often incorrect. National Insurance numbers were carried forward from one concard to the next every 7 or 8 years and could be quite different from what they should have been.

The main problem with RTI and all HMRC systems really is that they depend on everyone doing everything right at the right time.  As that is never going to happen, since we are all human, the problems will continue.  Blind faith in computer systems and lack of experienced staff is bound  to lead to errors.  Unrealistic repayments should get picked up for repayment security checks, and I hope that is happening.  Since everything was centralised and local knowledge considered unimportant all sorts of things have gone wrong.

I have only 2 PAYE clients, and one of the changed his job during 2013/2014. He had a P800 back in June showing an income of £6000+ when in the past it was more like £26000.  All the tax was repaid - he would have been due a refund anyway so I have not followed this up yet. But why has it taken so long for this story to break?

Thanks (0)
Replying to jonathan.kempson:
avatar
By shilley
17th Oct 2014 00:17

Re: HMRC's records are not up to date enough to cope with RTI

childrenintouch wrote:

The main problem with RTI and all HMRC systems really is that they depend on everyone doing everything right at the right time.  As that is never going to happen, since we are all human, the problems will continue.

I work for them now and I've said this exact same thing on another forum. I come across employers where everything reconciles perfectly, so the system can work. The RTI system's lack of flexibility is probably its worst flaw. Anything less than perfection - the right returns with the right data within the right window - and it can all go belly-up. And the effects are often cumulative, not just across tax months, but tax years, and it can be extremely difficult to trace the origin. The cases I really hate having to reconcile are the pilot employers. During a recent call I traced an underpayment in 14/15 TY all the way back to 12/13. I think because of the 'soft landing' approach to RTI, the customer hadn't been previously notified of an underpayment. Horrendously time-consuming and very frustrating for everyone, HMRC customer advisers included.

Thanks (1)