Revenue offers guidance on incorrect tax codes

28 January 2010

HM Revenue and Customs (HMRC) has responded to worries that a proportion of the new tax codes that are currently being issued may be incorrect.

The Chartered Institute of Taxation (CIOT) said that a significant number of tax codes, which determine how much someone in the PAYE system pays in income tax, may be wrong.

HMRC has introduced a new system, and its database contains some errors in taxpayers’ records.

As a result, a number of people with one job are receiving two (or more) tax coding notices with different codes shown.

The errors could mean, the CIOT continued, that misleading information will be sent to employers and pension companies, and that incorrect amounts of tax will be deducted from employees and pensioners.

HMRC has now published guidance on the matter.

Its statement says that the transition to the new system has brought to light discrepancies in HMRC’s existing records and that this is resulting in a number of incorrect notices being issued.

HMRC reassured that the vast majority of notices will be correct but added that there will be cases where, because the data carried over from the old system does not match employers’ data, some people will receive an incorrect coding notice or more than one coding notice for the same employment.

HMRC continued that it is aware of the issue and has apologised for any inconvenience caused.

The tax authority added that there is plenty of time to put the codes right before the start of the tax year.

Anyone who is concerned that their code may be wrong should check it using the guidance on the HMRC website at http://www.hmrc.gov.uk/incometax/tax-codes.htm

If that doesn’t resolve things, taxpayers can call 0845 3000 627 so that the right tax code is in place for the start of the new tax year on 6 April 2010.