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LITRG springs to the Revenue’s defence

LITRG springs to the Revenue’s defence

HMRC has been widely criticised over its PAYE assessment errors for the tax year 2011-12, but the LITRG has leapt to the Revenue’s defence saying the errors are actually reconciliations.

The LITRG made its comments after HMRC announced it was starting the PAYE reconciliation process and as many as 3.5 million taxpayers could receive a refund, whilst 1.6 million will get a letter telling them they have not paid enough income tax.

John Andrews, the chairman of the LITRG, explained that there are three sides to PAYE; the employer, HMRC and the taxpayer. Although most of the system is computerised, it was never intended for PAYE to collect the correct amount of tax in 100% of cases. It does do so in the majority of cases where somebody has just one job, or one pension, but if someone has changed jobs, has more than one job, or multiple pensions, their ‘account’ needs to be reconciled at year-end.

He went on to say that changes need to be reflected in PAYE codes and in order for the system to generate the correct code, it needs accurate information from the relevant quarters. If an employer for example does not forward data about new starters or leavers, the system is unable to amend its records.

The Real Time Information system should do away with a lot of these problems but that will not be fully implemented until April 2014. If HMRC invests wisely in IT capability and customer support, we should all receive a better service.

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Image: viking shields by mararie

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