HMRC are doing four things in particular this year, as they bring the tax affairs of the 40 million people within PAYE up to date using their new and better technology.
The good news (for those who might have paid too much)
- Repaying taxes back to the year 2003/04. This will take some time and will probably run throughout the rest of this year and 2012. Indeed, it would have been better had these refunds been processed much earlier, but at least taxpayers will get some interest added to the money owed to them.
- Repaying taxes overpaid for the tax year 2010/11. This began in July and has largely been completed.
The not-so-good news (for those who might not have paid enough)
- Asking for additional tax for the tax years 2007/08 to 2009/10 where PAYE failed to collect the right amount. This exercise has generally now come to an end.
- Asking for additional tax for the tax year 2010/11 where PAYE failed to collect the right amount. This exercise will commence around the beginning of next month. Included within it will be some 150,000 pensioners who have not had their State pension fully taxed. They will be given a more sympathetic approach by allowing collection of money owed over three years rather than the usual one. This exercise will need to be completed by Christmas, so that the coding notices for 2012/13 can be as accurate as possible.
This catch-up by HMRC, which appears to be on track as predicted, is welcome as HMRC must be ready for the next phase of PAYE improvement (called Real Time Information) which begins in earnest in 2013.
PAYE will never be an exact collection method for everybody, but bearing in mind the volumes of people dealt with, it does a pretty good job. The improvements in 2013 and beyond should take the accuracy levels to a new high.
Very good news
As we did last year (for the tax underpayments for 2007/08 to 2009/10), we will be providing comprehensive guidance on this website at the end of next week showing you how to defend yourself against underpayment requests for 2010/11, where appropriate. Please bookmark us or sign up for our news releases, so that if you get “not-so-good news” from HMRC in November or December you know where to find the right guidance.
The guidance will include suggested wording for letters that you can send to HMRC for the variety of circumstances that will apply for this particular year (2010/11).
(21-10-2011)
Contact: John Andrews (please use form at http://www.litrg.org.uk/ContactUs)
