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Monday 25 January 2010

Strange how the errors are always in the favour of HMRC

The BBC report that:
"Incorrect tax codes may have been sent by HM Revenue & Customs (HMRC) because of a new computer system.

The codes tell taxpayers how much their employers and pension firms will deduct in income tax in the coming financial year 2010-11.

The Chartered Institute of Taxation (CIOT) says taxpayers could be asked to pay up to £108 a month too much.

The Revenue said it had no evidence of a widespread problem but advised taxpayers to check carefully.

"There will be some incorrect tax codes as there always are at this time of year," said an HMRC spokesman.

"But the coding notice tells people what the code relates to and tells them to contact us if it is wrong," he added. "
HMRC being HMRC their reaction is reported thus:
"The Revenue explained that the increase was a natural feature of the new system.

"It creates a single record for customers for the first time, and this, together with increased automation compared to previous years, is resulting in many more people having more accurate codes than before," the spokesman said."
So the increase in errors is a "natural feature of the new system"; interesting, was it in the specification that HMRC drew up?

The Chartered Institute of Taxation have uncovered the root of the problem:
"the CIOT said the system's database was failing to distinguish between current jobs and old ones, leading to tax codes being calculated on the assumption that someone has more than one job.

It said this was resulting in some people having their personal allowance split between two jobs, or allocated entirely to a job they no longer had, which would force their current employer to deduct too much tax. "
Did the HMRC, when specifying a new computerised tax system, really fail to allow for the possibility that people might change jobs between tax years?

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