HMRC's new PAYE system is now tackling previously neglected end of year runs, with P800 notices due to be issued soon – so why are tax professionals nervous? Simon Sweetman explains.
HMRC has launched its new PAYE system on the Herculean task of doing those PAYE end of year runs that it has not been possible to do before because there was nobody left in HMRC to do them. It was never the most popular task - those who remember concards will know what I mean.
The computer will have started on the last two years (2009-10 and 2008-9) over the last weekend, and the P800s will start to come out this week, with the first ones expected to hit the doormats today (although it may take some of them a long time to arrive). This should be good news, so why does it fill me with dread?
According to the Daily Telegraph, there are going to be up to 4.3 million repayments due and - much more worryingly - 1.4 million have underpaid, some of them by substantial amounts; and that's just from the first two years. The end of year runs for earlier years will follow on later, which shows what a state things have got into.
Secondly, this system has already had problems – many will remember the terrifying numbers of inaccurate and nonsensical coding notices it issued when it was first launched. Again, this was all part of the system clearing out old rubbish.
Another issue that could rear its head this time is that HMRC has been ordered to make even more cuts, and so will not be sending copies of form P800 to agents. The customer copy will include a paragraph suggesting that taxpayers 'show this to your agent or adviser', but will not specifically say that the adviser has not been told.
There is also a risk that this will create a perfect opportunity for those who produce fake repayment notifications in the hope of obtaining bank account details – particularly if agents are not involved. HMRC will need to say very loudly indeed that it does not use email for this.
This will also clog up HMRC's already overstretched phone lines like never before; being suddenly told that you owe a quite substantial sum in tax is going to concentrate minds. Then there is the question of how many of these underpayments have arisen because HMRC has not used information it has been given, and where people will need to claim that in the circumstances the tax should not be recoverable.
Most of all, it's a worry because of the recent history of things going horribly wrong when HMRC pushes the button on a new computer system - so fasten your seatbelts - it's going to be a bumpy ride.
More coverage on the PAYE coding error crisis is available on AccountingWEB.co.uk, including:
Audit report uncovers PAYE coding fiasco
Phishers jump on PAYE bandwagon
Editor's blog: HMRC crisis - I feel your pain