'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.
Saturday 22 May 2010
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.
sportLiverpool 5 Norwich City 1: Uruguayan striker has now scored 11 league goals against the club
arts + entsOlivier-nominated actor and singer is set to star in Lloyd Webber's musical about the Profumo affair
filmWith more than 70 per cent of early films lost, archivists are scouring the world to preserve the precious examples that remain
sportThe coach of Chalfont St Peter's under-10s football team was relieved of his duties after he sent an email to parents that said: 'I am only interested in winning'
techA piece of new hi-tech kit aims to get us scribbling again
indybestMake getting out of the wrong side of bed on cold winter mornings a thing of the past with our selection of night-time covers
life + styleClarissa Baldwin is the brains behind the slogan 'A Dog is for Life not just for Christmas'
- 1 The hardwired difference between male and female brains could explain why men are 'better at map reading'
- 2 Is this the scariest advert ever? Japanese tyre commercial comes with its own disclaimer and health warning
- 3 UK chef creates world's most expensive ready meal - a fish pie costing £314
- 4 Food poverty in UK has reached level of 'public health emergency', warn experts
- 5 I’m sure Kate Moss doesn't care about posing for Playboy. But I do
iJobs Money & Business
£Negotiable: Citifocus: The role will suit a fund product specialist, current...
£75000 - £85000 per annum + Bonus and Benefits : Harrington Starr: An award wi...
£300 - £400 per day: Harrington Starr: My client is currently looking for an e...
£300 - £400 per day: Harrington Starr: My client is currently looking for an e...
Day In a Page
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000
A two-bedroom split-level flat with stunning south-west facing roof terrace in the popular Brondesbury Conservation Area, £549,950.
A charming 16th century, three-bedroom detached house in Bidborough with picturesque garden
A top-floor one-bedroom flat in the heart of Pimlico with a terrace providing spectacular views over London, £495,000.
A six-bedroom house, with three reception rooms, 1.5 acres of land and stables, £450,000.