PAYE - 16.09.2010

PAYE errors - oh no, not again!

After-effects. In case you’ve missed all the recent fuss in the world of tax, we can tell you that the latest storm is again centred around the Taxman’s “National Insurance and PAYE Service” (NPS). This was launched last year and immediately ran into rough waters when it was revealed that vast numbers of tax codes had been incorrectly calculated. What we’re seeing now is just the end result of this earlier problem.

Saw it coming. We reported a few months ago that the NPS would shortly be churning out automatic tax statements for 2008/9 and 2009/10, and the advice we gave then, i.e. don’t accept the figures without checking, holds true (yr.10, iss.17, pg.1, see The next step). But is there anything new to add?

Get out clause. If you’re one of the estimated 1.5 million people who in the next few weeks receives a tax notice P800 saying that you owe money, there may be a get-out in the form of an official concession (see The next step). This says that where the Taxman hasn’t made timely or correct use of information available to him you can ask for the bill to be cancelled or reduced. You can do this in writing or over the phone. The Taxman will fight these claims tooth and nail but if your situation meets the conditions of the concession, be prepared to fight.

Not just bad news. Around 2.5 million people will receive a notice telling them that they’ve overpaid tax. If you’re lucky enough to get one of these you might not want to argue, but you should still take a closer look. He might actually owe you more (or less of course) so check his calculations.

Tip. Concentrate on checking that the figures of income and deductions tie up with your records. The arithmetic is done automatically by the Taxman’s computer, so don’t get bogged down with this.

For a previous article on the NPS (TX 10.22.01A) and for information on how to apply for the tax concession (TX 10.22.01B), visit http://tax.indicator.co.uk.