Action called for on tax code problems

tax-codeMore needs to be done to alert people to the risk that they may have been sent the wrong tax code. The call came from the Chartered Institute of Taxation (CIOT) after worries emerged that a significant proportion of the 25 million tax coding notices that are being issued this year by HM Revenue and Customs (HMRC) may be incorrect. The CIOT said that the figure is double the number sent out last year and that the wrong information could cost individual taxpayers hundreds of pounds. That a proportion of the tax codes are incorrect is down to an error in the new PAYE system, the CIOT explained. A number of people with one job are receiving two (or more) tax coding notices with different codes shown. If the error is not dealt with by HMRC in the next few weeks, the CIOT continued, misleading information will be sent to huge numbers of employers and pension companies. As a result, incorrect amounts of tax will be deducted from employees and pensioners. The CIOT wants HMRC to act to warn people of the possible problem. Specifically, HMRC should issue a clear public statement of the extent of the problem and explain what they are doing to tackle it. This should involve a major publicity campaign, adverts in the national media and a clear, easy to find message on the HMRC website detailing how people can check whether their tax code is correct. The CIOT also urged HMRC to check the issue of P2 letters yet to go out or to add a note to each one explaining how to check the code and, if it is incorrect, whether HMRC needs to be contacted at once. Employers and pension companies, too, should be told what to do if they receive tax code information for former employees or receive more than one code for a current employee or pensioner. Andrew Hubbard, the CIOT’s president, said: “Most people on PAYE are used to assuming that what the taxman sends them is correct. Many file away coding notices without even bothering to check them. “But this year, many of them are being given wrong information, and unless they spot it and tell HMRC, their employer will receive the wrong information too, and they could get a nasty shock when they open their April pay packet and see it is as much as a hundred pounds lighter than they are expecting. “The government should launch an urgent publicity campaign to highlight what has happened and tell people what they can do about it. They also need to add a specific warning about it to the majority of P2 notices – the letters containing tax code information – which have still to go out.” Mr Hubbard added: “The new PAYE system is potentially very good and this is really just a teething problem – but a serious one that HMRC need to warn taxpayers and their advisers about and help them resolve.” P2 notices, which contain tax code information, are being sent out between the first week of January and the first week of March. Consequently, taxpayers have only a limited amount of time in which to identify and point out any errors before employers are informed of their employees’ tax codes in P9 notices which are issued during March. The tax codes apply to the coming tax year of 2010/11. New agency worker rules could ‘hamper’ job creation January 25, 2010 New regulations that will entitle temporary workers to many of the same employment rights as permanent staff have gone before Parliament. However, the CBI criticised the legislation as likely to hinder job creation and as going further in its reach than is required by EU rules. The legislation is designed to implement the EU’s Agency Workers’ Directive. Under the changes, for the first time agency workers will be entitled to equal treatment on basic working and employment conditions, including pay and holidays, as if they had been recruited directly by the hirer. The entitlement comes into effect after 12 weeks in a given job. The rights on pay will apply not just to the basic hourly rate but to all pay for work done, including bonuses that are directly related to the performance of the agency worker personally. However, they will not extend to some of the wider benefits that permanent staff can enjoy such as occupational pensions and sick pay. To combat avoidance of the new rules, the regulations include provisions that will deal with repeat assignments designed to prevent workers acquiring equal treatment rights. Agencies and hirers will face the prospect of having to pay out up to £5,000 to the worker if an Employment Tribunal finds that these specific anti-avoidance rules have been breached. Other benefits will apply from the first day of an assignment. These include the right to information about internal vacancies, giving temporary workers the same opportunity as other workers to find permanent employment, and equal access to on-site facilities such as child care and transport services. Business Minister, Pat McFadden said: “This change in the law is aimed at ensuring fairness for agency workers in relation to the permanent employees they work alongside. “They are being implemented in line with the TUC/CBI agreement which sought to ensure fairness while maintaining flexibility for the UK labour market – a very important factor in our ability to create jobs.” Laying the regulations now means that the government will have the rules on the statute book before the end of this Parliament. The CBI, however, expressed concerns. John Cridland, the CBI’s deputy director general, said: “These regulations are bad news for the economy as they will hamper job creation. Employment agencies help over a million people find work and these proposals will make it more expensive for companies to use agency temps by increasing bureaucracy.” Mr Cridland added that the government has gone further than it needed to under EU rules by forcing employers to include temps in performance appraisals designed to set pay for employees. He continued: “This extra bureaucracy will only discourage firms from taking on temporary workers when they’re unable to create permanent jobs. “Agency temps’ employment relationship is with the employment agency, not the agency’s client, and the law should recognise this. The economy would benefit from a much simpler definition of pay, giving agency workers equal treatment without the substantial burdens in the government’s approach.” The employers’ group, however, did welcome the decision to delay introducing the regulations until the end of next year, and the government’s rejection of union demands for a much more heavy-handed approach to imposing the new rules. HMRC issues penalties for late PAYE returns January 25, 2010 HM Revenue and Customs has said that it is sending out penalty notices to those employers who have yet to submit annual PAYE returns (P35 and P14s) that were due by 19 May 2009. The notices began going out on 23 January. This marks the second round of penalty notices, the first having been issued last September. The penalty is £100 per 50 employees for each month that a return is outstanding, as from 20 September 2009 to 19 January 2010. This means that an employer with 50 or less employees will receive a £400 penalty. The penalty is on top of those sent in September 2009. Employers that have yet to submit their returns are being urged to do so at once. Firms with 50 or more employees you must file their returns online. Those submitting by paper will be charged a separate penalty for using the wrong filing method. For the tax year 2009/10 onwards, all employers, whatever the size of their workforce, will need to file electronically.

This entry was posted in Personal Financial Advice and tagged , , .

Leave a Reply