HMRC Admits Tax Code Debacle

by Robert Lee, Tax-News.com, London

03 June 2010

The UK's HM Revenue and Customs (HMRC) has admitted that errors caused by a new computer system have resulted in thousands of people being issued with incorrect tax codes, leaving many out of pocket.

The blunder appears to have happened as HMRC introduced the new National Insurance and PAYE (pay-as-you-earn) system. It is understood that HMRC knew of the problem back in January this year, but the extent of the discrepancies and the number of people affected has only now been made public.

David Ellis of HMRC’s Business Customer Unit said that the contact centre had received around 50,000 calls on the subject. It is feared that as many as 100,000 people could be affected. A memo sent by HMRC in April stated: "More customers have been contacting us in significant numbers over the last couple of weeks because they wish to query the coding used in their April pay packets. We are aware that some customers, because of the increase in demand, are finding it difficult to get through to an adviser and we apologise for this and are doing all we can to meet the need."

It adds: "Inevitably at busy times we may be unable to answer all our calls. We are working hard to maintain a good customer service. We know, for instance, that some customers have been frustrated by being disconnected after they have been through the… messaging system, but before they speak to an adviser. We are now taking new measures to help prevent this from happening."

HMRC has urged individuals to check their most recent payslips to ensure the correct tax code has been applied and if unusually high amounts of tax have been deducted from pay.

Pensioners have also been affected and the complex nature of many retired people’s tax affairs has caused hardship due to the errors made.

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