Tax & Accounting News

Taxpayers Warned Over Codes Error

29/04/2010

The start of the 2010/11 financial year could herald an unpleasant surprise for anyone who has not already checked their tax code, amid fears that the introduction of a new computer system at HM Revenue and Customs (HMRC) may lead to too much tax being deducted from their salaries.

The Chartered Institute of Taxation (CIOT) has expressed fears that the latest codes, which tell taxpayers how much their employers and pension firms will deduct in income tax, could be asking taxpayers to pay as much as £108 per month too much.

The problem is thought to arise from the new computer system struggling to distinguish between current and previous employment, leading some people to be incorrectly listed as having two jobs at the same time.

Many errors have already been identified, but for anyone who did not check their tax code when they received it, the first they may know about any problem may be when they receive an incorrect pay packet.

It has been estimated that as many as one in five tax coding notices this year may have been wrong, and some accountants have reported problems reporting changes to HMRC.

The UK200Group of accountants, of which Harris Lipman is a member, has also criticised HMRC for failing to check its data before switching to the new system, and for relying on taxpayers to check their coding notices for errors.

Anyone who thinks they may have received the wrong tax code has until the start of the new tax year in April to inform HMRC.

HMRC has acknowledged that a large number of incorrect coding notices have been sent out, and said it was urgently reviewing those cases, beginning with the individuals it considered most at risk of being made worse off by the new codes.

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