'Tax code error has led to even more incompetence'

Taxpayers are angry and frustrated as HM Revenue & Customs fails to deal with problems created by its mistake.

When Independent reader Jeffrey Bradshaw opened his April payslip it was £500 short. The money had been taken by the taxman as a direct result of the tax codes cock-up earlier this year, when HM Revenue & Customs sent out the wrong tax codes to tens of thousands of people.

"I received not one, but two, incorrect tax coding notices," says Jeffrey of Leicestershire. "I immediately rang the HMRC helpline and explained everything and followed up with a letter." He eventually received the correct notice of tax coding, so was surprised to discover in April that the wrong coding had been applied to his salary.

"I tackled HMRC again, but their response was 'Sorry, we sent you out the correct notice but we forgot to notify your employer.' What utter incompetence, on top of previous incompetence!" Because his firm had split into two separate companies a few years ago, many of his colleagues were also affected by the problem, with most ending up about £120 worse off in their April salaries.

"Now I and my colleagues (about 30 of us) are waiting to see if we get all of the money back in May's salary, or if they'll try to pay it back over the next 11 salary payments," says Jeffrey. "Either way, I have my letter of complaint ready! I have savings to draw on and so I'm not caused much hardship, but some of my lower-paid colleagues live very much hand-to-mouth and have to budget wisely. It has forced some of them to rely even more on their credit cards, putting them in even more debt!"

Jeffrey and his colleagues are not alone. The Independent has been inundated with readers' stories of tax code cock-ups and Revenue incompetence when dealing with the issue. Pensioner Peter Monk worked out that the two wrong tax codes he was sent – for his three different pensions – would cost him around £1,100 in unnecessary tax. So he called the telephone number given on the forms.

"I discovered that the wrong number had been printed on the letters. That shown was for the office which deals only with child tax credits," says Peter. His subsequent attempts to use the right HMRC telephone helpline resulted in being cut off many times before he finally spoke to a real person – an experience echoed by most of the readers who contacted us.

"The person very quickly confirmed my calculations and agreed to re-code the two wrongly coded items, but there was no explanation as to how such a mistake was made. The new codes reduce my tax liability to roughly what I had calculated on the back of an envelope, but were not transmitted to the pension providers in time for the new tax year. As a result, I am £100 short of income this month. I know it will be rectified next month but is this the way to run the country's affairs?"

Time after time readers report the frustration of trying to speak to someone at HMRC to put things right about their tax code. "I spent three weeks trying to get through, beginning at 8 o'clock each morning and then at various times during the day," says Robert Oliver of Essex. "I finally managed to get through at 7:50 am on a Friday morning – 10 minutes before the line is officially open."

"The system seems to be in meltdown with too many tax offices apparently dealing with people's tax affairs at random. resulting in a true cock-up and a lot of worry for people like myself," says R J Patterson of Cumbria, who has been forced to deal with a variety of different tax offices while trying to sort out tax-code problems relating to a pension and Gift Aid.

Zoe Ford of East Sussex has been trying to inform the tax authorities about a change in her circumstances so that she can be given a new tax code, but has had no joy. "I have tried ringing HMRC since the end of March, to no avail," she says. "On 7 April I wrote a letter and have had no reply or acknowledgement of receipt."

And so it goes on. Other readers say: "I called six or seven times a day for three days before finally getting through"; or, "I am infuriated by the fact that, if the lines are overloaded, HMRC does not allow you to queue, but simply cuts you off"; and "They've shut themselves off from the public they're supposed to serve."

One reader from London says things are going to get worse as tax offices are shut and the work handed over to outside agencies. "Tax offices are being shut to capitalise on income from the sale of buildings, and thousands of experienced HMRC staff are being made redundant," says the reader, who asked not to be named. "Agency workers will be contracted if and when necessary – with predictable results. It's bonkers!"

It's a shocking state of affairs but what has caused it? It stems back to the introduction of a new computer system at HMRC, known as NPS (which stands for National Insurance & PAYE Service). Instead of streamlining the system, it led to tens of thousands of people being sent the wrong tax code in February for the current 2010-11 tax year. Tax codes are important as they tell an employer or pension company how much tax to take from a salary or pension. The idea is to spread personal allowances equally over 12 months as well as taking into account tax on other income and perks.

The new NPS computer system is not to blame for the problems, according to the Revenue. Instead, it says the cock-ups were caused by incorrect data stored in the old system, which was then transferred across. That means that the problems should be a one-off and should not be repeated next year.

"We apologise for any inconvenience caused; however, many issues can be resolved simply by consulting the guidance in the leaflet enclosed with the tax code, or by referring to the tax-code section on our website," says an HMRC spokesman. To those who have found it impossible to get through to the Revenue, he says: "We are experiencing a higher level of demand than usual because of the well-publicised issues around PAYE notices of coding. There is a much better chance of getting through first time by calling later in the day or towards the end of the week, when call volumes are generally lower."

In other words, there's nothing they can do while call levels are high. Is that good enough? No, says Anita Monteith of The Institute of Chartered Accountants in England and Wales.

"Our members say HMRC needs to train its staff better. Better-trained staff would reduce the number of call- backs, which would quickly help to get rid of the backlog of calls."

She suggests people call outside peak hours. "Try and avoid obviously busy times such as the middle of the day, and be persistent," she says. Meanwhile we'll keep monitoring the situation and report back.

Checking your code

* What happens if you've been sent the wrong tax code? You could be overpaying or underpaying the tax you owe. If the former, you'll find yourself in a battle with HMRC to get your cash repaid. If the latter, you could be landed with a demand for cash you didn't know you owed.

Your tax code depends on how much tax-free income you are allowed. For example, "L" is used for those eligible for the basic personal allowance of £6,475, and it is also used for "emergency" tax codes. "P" is for people aged 65 to 74 and eligible for the full personal allowance while "Y" is for people aged 75 or over.

"If you think your tax code is wrong, or you don't understand it, you need to contact the tax office on your coding notice straight away," advises Anita Monteith, technical manager in the tax faculty at the Institute of Chartered Accountants in England and Wales. "Alternatively speak to your employer or pension payer or ask a chartered accountant to help."

* At www.hmrc.gov.uk/incometax/ codes-basics.htm you can check your tax code.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Arts and Entertainment
Mark Wright has won The Apprentice 2014
tvThe Apprentice 2014 final
News
File: James Woods attends the 52nd New York Film Festival at Walter Reade Theater on September 27, 2014
peopleActor was tweeting in wake of NYPD police shooting
Arts and Entertainment
X Factor winner Ben Haenow has scored his first Christmas number one
music
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Sport
Martin Skrtel heads in the dramatic equaliser
SPORTLiverpool vs Arsenal match report: Bandaged Martin Skrtel heads home in the 97th-minute
News
Detective Tam Bui works for the Toronto Police force
news
News
The monkey made several attempts to revive his friend before he regained consciousness
video
Extras
indybest
Arts and Entertainment
Darrell Banks’s ‘Open The Door To Your Heart’
music
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

    $200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

    Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

    $125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

    Sheridan Maine: Commercial Finance Manager

    Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Sheridan Maine: Regulatory Reporting Accountant

    Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Day In a Page

    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
    The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

    The 12 ways of Christmas

    We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
    Birdwatching men have a lot in common with their feathered friends, new study shows

    The male exhibits strange behaviour

    A new study shows that birdwatching men have a lot in common with their feathered friends...
    Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

    Famous diaries: Christmas week in history

    Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
    From noble to narky, the fall of the open letter

    From noble to narky, the fall of the open letter

    The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
    A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

    A Christmas ghost story by Alison Moore

    The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
    Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

    Marian Keyes

    The author on her pre-approved Christmas, true love's parking implications and living in the moment
    Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

    Bill Granger's Christmas Eve fish feast

    Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
    Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

    Rodgers fights for his reputation

    Liverpool manager tries to stay on his feet despite waves of criticism
    Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

    Amir Khan attacks the Taliban

    'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
    Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

    Michael Calvin's Last Word

    Sepp Blatter is my man of the year in sport. Bring on 2015, quick