Notices of coding - an update

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The tax authority has provided more information for employers and agents about the current coding run, which has produced incorrect coding notices. Work is under way to correct all of the incorrect codes.

HMRC's latest information for those employers and agents dealing with incorrect code notices provides more reassurance that the department is making progress in identifying the issues giving rise to incorrect codes. The information seeks to provide a little more background, particularly for employers, so that they can understand what has given rise to the mismatch of data triggering incorrect notices. HMRC will be contacting employers again with more precise information about the likely causes but for now are working on re-issuing codes to those who have been affected.

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About Rebecca Benneyworth

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Rebecca trained in London with Kidsons and, on qualifying, spent some time as Chief Accountant of a manufacturing company. She now has her own small practice in Gloucestershire that comprises of owner managed businesses and small companies.

She also lectures extensively for a range of professional bodies, accountancy firms, commercial organisations and the Inland Revenue. Demand has grown for Rebecca on the lecture circuit where she is well known for her refreshing, enthusiastic and entertaining presentation style as well as having a practical and down-to-earth approach to tax.


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15th Feb 2010 11:59

Wrong codes

So this deals with employers and pension providers but what about the other problems.  Such as Married Persons Allowance for widows and widowrs.

I am not sure how the transfer was accomplished from the old system to the new but the number of errors as reported on another post on Accountingweb does raise concerns as to the quality of the HMRC data.

I have only been an accountant for about 15 years but I can remember at least one other occassion when Tax Codes were wrong because of a new computer system.

As I see it no one at HMRC cares enough or is held responsible for these errors which have to be put right by the taxpayer or his agent at the taxpayers expense.

Maybe now is the time for accountability so infuture HMRC should publish the name and direct line number of the person who takes responsibility for implementation.  Hopefully this will mean that more attention is given to the data and its quality than has been so far.  It costs a lot more to put matters right after the event than to do the pre-implentation data checks.



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By Anonymous
16th Feb 2010 16:23

Incorrect Tax Codes

I have received codes restricted for "other earnings or pension" of several hundred pounds and then a code for that amount being issued to be used against jobseekers allowance for the year starting 6th April for two clients so far who have previously had a period of unemployment. When you speak to HMRC they try to tell you that they do not know that she will not receive this income again next tax year! I have pointed out to them that if they were made redundent again they would get a P45 to hand in to be used when they claimed taxable benefits but they do not understand.

Also codes received for next year with "we understand you're between jobs" on and then restriced / no allowances because your income is £100k plus when they have little or no investment income.

Also for 2010/11 HMRC are assuming all P11D expenses are taxable in codes although expense claims have been made on the SATR for 2009. They are not allowed to remove them now without a formal claim by letter for 2008/9 I have been informed by two offices. They cannot accept the claim on the tax return for coding purposes?!

I could go on & on.................

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17th Feb 2010 18:13

And so could I .........

The best example I have seen is a person with 3 coding notices; one for a job left 18 months ago, one relating to Jobseekers Allowance which ceased last year and a third for a pension which isn't payable for another 5 years!

They even got mine wrong because there is a wrong figure for Employer Benefits, so obviously there has been no check against the SA. Problems with allowable expenses on P11D only started last year and I have resolved them all with Section 336 claims, and now I have obtained Dispensations for all clients (and I get all new clients to complete a P11DX as well as a 64-8).

The biggest annoyance is that if you call the help line the person the other end cannot see how the new code is calculated, and you cannot talk to the local office like you used to. I had to write for an explanation and the reply was that the figures came from the P11D. They don't so I have had to write again with copy of P11D.

Will this be sorted out before the April payroll???

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23rd Feb 2010 22:58

Job seeker's allowance

I too have had problems with Job Seeker's Allowance being coded out where clients have had periods of unemployment in previous years.

This isn't a problem with out of date data, this is a design flaw in the computer software.  If someone is claiming JSA while working, HMRC should be reporting it to the benefit fraud people to get the money back in full, not adjusting the tax code to tax the money.  If they get made redundant, or their temporary contract expires part way through the year, then tax on any benefits they claim will be dealt with via the P45 system, and adjusting it via the tax code will mean they pay tax twice on their benefits.

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