I've just been on the phone to the HMRC since I received this morning two revised tax notices for 6th April 2009 to 5th April 2010. These new codes meant that I would have to pay 20% of tax on my private pensions, but, as I pointed out to the HMRC, I do not receive income in total that is more than my personal allowance (by far). My details haven't changed in three years, either, yet the HMRC computer still issued these revised tax codes to give it, wrongly, the benefit of 20% tax.
The assistant checked my details through the computer and changed the tax codes again,so that I no longer pay tax on these pensions, as has been the case since 2006. When I asked the assistant how these errors had occurred, she simply said, umming and ahhing, well, the computer is supposed to calculate the codes automatically, but somehow it failed this time.
Really pisses me off that they can get such a fundamental thing wrong. Still, I suppose it's good that they work on Saturdays.
a friends revised code said he owed tax on 12K unearned income from his other employment when he has no other employment. Apparently HMRC added this to other peoples codes as well.
A friend who works in a tax office told me something similar, that tax code calculations are now automated (computer says.....). She also finds that some of the queries and transactions she now has to deal with are above her level of training (increased complexity), and an increasing number have to be escalated to a supervisor. She has been doing the job for some years now, and is happy to be part time, as they are expected to complete 170 transactions in an 8 hour shift, which means less than three minutes on each case. Every hour, they have to report their progress on a whiteboard.
Having read this, I've returned again to the HMRC notification I recently received.
It informed me that I owe tax on a sum of 532 which, although a comparatively small amount to worry about, is impossible for me to recognise.
They only reference this sum vaguely as being owed "from a previous tax year" also adding "you may remember us telling you about this before". This is absolutely the first I've heard of it though.
I was going to ignore it as trivial but I think I'll write now and ask them to be more specific.
Ignore any coding notices from HMRC until near to the new tax year and then, if the last coding notice you received is wrong, phone HMRC and get them to correct it in time for your first pay day in 2010-2011.
Below are two messages from a respected tax expert:
"I posted a little while ago with a warning message. HMRC has already warned us that there will be a shake out for this year only as a result of the new computer system being in use for the first year, so they predict possibly double the number of notices of coding and fully expect quite a number to be wrong as the duff data received from employers starts to get weeded out. Some members have already expressed dismay, but in my view the new system has to start somewhere and in warning the professional bodies and Working Together nice and early, and provided they deploy enough staff to cope with it I think they are on message here. We'll be carrying articles in February when the TR's are done setting out things to look for and what HMRC recommends should be done."
and
"How would you review and then issue 25 million notices of coding before 5 April? Who would be able to do this without detailed knowledge of each taxpayer's records - which each taxpayer has.
A lot of the duff info is in relation to P45's which have gone walkabout so lots of people are getting notices in respect of jobs they have left in the last couple of years. Now that P45's are online this should flush out that aspect of it. HMRC's early message is to sit tight for a bit and see whether any more come which correct the position - hence in my view hang on until Feb and start then. There will be articles on site on Monday 1 Feb with full details of what action to take.
I don't dispute that this is frustrating and a potentially major issue, but I also don't see any way of getting from where we were (no tie up between employments for each person) and where we need to be (whole taxpayer records) without some aggravation. HMRC's systems for PAYE were as old as the ark and I for one am pleased that the investment has gone in to completely redesign and rebuild from the ground up. I do not think this is HMRC incompetence - nor do I think it is done to deliberately wind up accountants. It just has to be done and we have to get past it."
My response was as follows:
"This is NOT an acceptable way of dealing with the problem If HMRC think the notices are likely to be wrong they should issue a covering letter explaining the situation in detail. This should ask taxpayers to review the notices and give the phone number of a helpline to report any errors. Taxpayers think that anything from HMRC must be correct and any error must be down to themselves or their accountant. The notices don't admit the problems and I feel this is unacceptable. It causes distress and worry to taxpayers and demonstrates HMRCs cavalier attitude to taxpayers and agents."
Well, in my case the timeline went roughly like this: Post arrived earlier than usual (10:30) and this being a Saturday I was still in my dressing gown eating my cornflakes. Amongst the other delights from double-glazing companies, two letters from HMRC. Oh, I thought. How nice of them to follow up last week's tax refund cheque with a couple of congratulatory letters (you know, the ones where they say "We are pleased to inform you....yada yada yada"). Imagine my consternation, then, to open the letters to find revised tax coding notices that suddenly gave the government 20% of my income when my income comes nowhere near my personal allowance!
Up the stairs to where I keep my files, out with the "HMRC" one and straight on to the phone. I was a bit surprised that they actually were at work on a Saturday, but I expect with the huge numbers of dissatisfied customers if they didn't open on Sats they'd have to do massives of overtime during the week.
Anyway, pause for ten minutes to allow the recorded dolly to run through all the options, then finally I get to speak to a Real Person, who, luckily, actually appeared to be human (often they are not; often they have a very strong accent which makes you wonder whether you didn't dial the double-glazing company by mistake).
Five minutes later and it was all sorted. I didn't tell the lady that I was ringing from my dressing gown, as I don't need the Thought Police around here anytime soon on charges of sexual harassment. But it ruined my morning as I thought of the bods who write this software and cavalierly demand 20% here, there and everywhere.
Distress, worry, and ANGER! I am still annoyed that the normal course of my Saturday morning was disturbed by a bunch of incompetents at HMRC Towers. It's only because I keep *detailed* accounts and have done so for at least 20 years that I was confident that they'd got it wrong. I firmly believe the HMRC just try it on, knowing that many thousands of taxpayers (not me, of course) do not have a clue about their personal finances and thus do not have a leg to stand on. It's almost like extortion, really.
The problem the BBC and myself are talking about supposedly only applies to 2010-2011. I don't know whether this is because the new system is only working on 2010-2011 or simply because most coding notices since the new system has been introduced are for 2010-2011 but if some were produced for 2009-2010 they would likely have the same flaws. Whatever the reason, the saga shows how incompetent HMRC are.
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