Com­puter says no: the big tax botch

The Jewish Chronicle - - Business - MARK LEE

THERE is an old adage that “In this world, noth­ing can be said to be cer­tain, ex­cept death and taxes.” I was re­minded of this re­cently af­ter learn­ing that, fol­low­ing a soft­ware up­date, HMRC’s records show a num­ber of tax­pay­ers as be­ing de­ceased — de­spite the fact that they are very much alive.

Un­for­tu­nately, HMRC are un­likely to ac­cept that be­ing of­fi­cially recorded as dead re­moves the obli­ga­tion to pay taxes and, in any case, there would then be in­her­i­tance tax to worry about. The prob­lem has be­come ap­par­ent fol­low­ing the in­tro­duc­tion of a new com­puter sys­tem that brought to­gether all PAYE records. Pre­vi­ously, th­ese were spread across 12 re­gional data­bases. HMRC tell us that the up­grade was sup­posed to solve many of the old PAYE cod­ing prob­lems that caused peo­ple to un­der-or over­pay tax through the PAYE sys­tem. The good news is that the old prob­lems have been re­solved. The bad news is that we now have some new prob­lems — at least for a while. Th­ese in­clude:

The loss of data for many tax­pay­ers, such as the mar­ried cou­ples’ al­lowance, the blind per­son’s al­lowance and tax un­der­pay­ments for ear­lier years have all mys­te­ri­ously dis­ap­peared from codes is­sued since 1 July.

The amount of the state pen­sion or other tax­able state ben­e­fits in­cluded in your PAYE code may be in­cor­rect. If so, this is prob­a­bly be­cause of dif­fi­cul­ties in link­ing the data sup­plied by the Depart­ment of Work and Pen­sions (DWP) to the HMRC sys­tem. Where this hap­pens, HMRC sim­ply in­clude what they hope is a rea­son­able es­ti­mate in your PAYE code. This es­ti­mate could re­main there for years sub­ject only to in­creases for inflation. Also, fun­da­men­tal changes may not be noted. For ex­am­ple, when a widow’s pen­sion be­comes payable dur­ing the year, the DWP do not tell HMRC un­til af­ter the year end.

The new sys­tem has sent copies of PAYE codes to some tax­pay­ers’ pre­vi­ous ac­coun­tant rather than to their cur­rent one.

Also, where un­der­pay­ments of tax from ear­lier years have gone miss­ing, the new PAYE com­puter seems to be in­ca­pable of re­in­stat­ing the un­der­pay­ment so it may re­main un­col­lected for a while yet.

And lastly, some tax­pay­ers have been recorded as hav­ing died when they are still alive.

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