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PAYE issues and problems

Written by Chartered Institute of Taxation
Thursday, 11 September 2008
The Chartered Institute of Taxation issues advice on PAYE Coding Notices. Members of the institute have been reporting various issues with PAYE Coding Notices. For instance, during last February’s coding run, agents’ copies of Coding Notices were received up to 10 days after the clients received their copies. Related Articles CIOT appoints first Chief Executive CIOT calls for dialogue over tax exodus Councils urged to cut PR spending CIOT issues draft Taxpayers’ Charter CIOT critical of non-dom proposals We understand that agents and client’s coding notices should be issued at the same time and that the delay in issuing agents copies should not reoccur, but we would be interested to hear from members of any further instances arising, especially with this August’s mass coding run. The CIOT understands that there have been instances of agents' copies of electronic notices bearing inadequate identification details to allow the client to be traced, and of agents receiving duplicated coding notices (or none at all). For self assessment taxpayers, copy coding notices should be sent to agents automatically using the agents' details on HMRC’s self assessment records (unless an agent notifies HMRC that they do not want to receive them) and, for non-self assessment taxpayers, copies should be issued to agents where the agents have informed HMRC (by letter, telephone or fax) that they want copies. Forms P11D, Section 336 Claims and autocoding The CIOT is aware that HMRC’s ‘auto-coding’ system (introduced last year) has raised a number of issues. For instance, where a P11D has shown a company car as being available from 6 April to 5 April but has incorrectly entered 5 April as the date the car ceases to be available, the system automatically removes the car benefit from the tax code. So long as the P11D is correctly completed (ie where the car continues to be available, 5 April is not entered as the end date), this error should not arise. Benefits and expenses reported on a P11D form that may be subject in full or in part to a corresponding section 336 claim may be processed prior to the claim being received. For instance, where a P11D is electronically filed and a section 336 claim is posted separately to HMRC, the code may be adjusted twice: once on receipt of the P11D (amending the assessable amounts to reflect the P11D but without amending the allowable amount, which may reflect a section 336 claim submitted the previous year, although certain P11D reported expenses are assumed to have a corresponding equal allowable amount), and then again when the section 336 claim, based on the P11D figures, is received. Where section 336 claims are received with a paper P11D form at the same time (and they are attached to each other), they should both be processed together so that the code reflects the correct assessable figure and expenses. However, it is appreciated that it may not be practical for most employers to submit their employees’ section 336 claims with the P11Ds. PAYE Service & Self Assessment It is expected that, when HMRC introduce their new PAYE Service (the launch date has been deferred from October 2008 to ensure that it can handle higher processing volumes), new quality checks should identify mismatches between SA and PAYE. Also, the new PAYE Service should help to address coding problems affecting those with multiple or successive jobs. Furthermore, HMRC plan some upgrades to their systems, which should improve matters, including an SA autocoding program which will automatically feed through SA return entries to the PAYE system.