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UK Tax blunder: officials admit 'up to 100,000' left out of pocket
Up to 100,000 people have paid too much tax after being caught up in an administrative fiasco, the Telegraph can reveal.
By Alastair Jamieson
Published: 8:00AM BST 31 May 2010
A new computer system at HM Revenue and Customs (HMRC) has resulted in tax code errors that have led to errors in tens of thousands of payslips.
Many of those affected have been left out of pocket until the money can be refunded. Pensioners, whose tax codes are complex, are among those worst hit.
Examples of errors include people having their personal tax allowances removed, being placed on higher tax codes or even having a '1' inserted in front of their salary, erroneously inflating up their taxable income by £100,000.
HMRC has also admitted its call centres are "exceptionally busy" and that callers "are finding it difficult to get through to an adviser" and some have been disconnected before they can report their problems.
Although the problem first came to light in January, HMRC has never publicly disclosed how many had been affected.
However, a recent memo sent to tax organisations by David Ellis, from HMRC's Business Customer Unit, says: "Our contact centre has received roughly 50,000 calls about this matter and has estimated that there could be up to 100,000 people affected in total.
"If you receive any enquiries from your employees or pensioners about this please ask them to contact us in the usual way."
A separate memo sent by HMRC earlier this month admits: "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."
The problem comes from the introduction of a new system, which combines information on National Insurance contributions and Pay As you Earn (PAYE) for the first time.
In some cases, the system does not have correct information about earnings, meaning some people incorrectly being placed in the wrong tax band.
Almost all of those affected will not have realised the error until they notice a change on their monthly payslip.
John Whiting, Tax Policy Director at the Chartered Institute of Taxation, said: "Huge numbers of people were given the wrong tax codes by HMRC's new computer system.
"Revenue staff have worked incredibly hard to review three million records in March and April. But this situation should never have arisen in the first place.
"The Revenue's contact centres have been struggling to cope. HMRC bosses need to take a close look at whether they are adequately resourced for the future."
A spokesman for HMRC admitted the number of those affected was unknown because staff rectifying errors were not recording how many cases they had dealt with.
He said: "We apologise to customers who have received an incorrect coding notice. We issue millions of coding notices every year, mostly without any problems.
"We have recently introduced a major new computer system which will improve our ability to get people's tax codes right. Unfortunately with a project of this scale things will occasionally go wrong, and we have had some problems with codes this year. We make every effort to minimise mistakes but when they occur we sort things out as quickly as possible."
"We don't keep a central record of all the codes we revise, so we can't tell you the overall number of codes that have needed to be corrected.
"We are experiencing a higher level of demand than usual at present because of the well publicised issues around PAYE notices of coding.
"This means that some customers are finding it more difficult to get through than usual.
" To help minimise local rate callers' costs we regulate the numbers waiting. The majority of calls to our contact centres are either free or charged at local rate. It is standard practice within our contact centres to play busy messages when our telephony system recognises that the helpline is full.
"This ensures that customers 'on hold' do not wait in a queue for an unreasonable length of time."
Up to 100,000 people have paid too much tax after being caught up in an administrative fiasco, the Telegraph can reveal.
By Alastair Jamieson
Published: 8:00AM BST 31 May 2010
A new computer system at HM Revenue and Customs (HMRC) has resulted in tax code errors that have led to errors in tens of thousands of payslips.
Many of those affected have been left out of pocket until the money can be refunded. Pensioners, whose tax codes are complex, are among those worst hit.
Examples of errors include people having their personal tax allowances removed, being placed on higher tax codes or even having a '1' inserted in front of their salary, erroneously inflating up their taxable income by £100,000.
HMRC has also admitted its call centres are "exceptionally busy" and that callers "are finding it difficult to get through to an adviser" and some have been disconnected before they can report their problems.
Although the problem first came to light in January, HMRC has never publicly disclosed how many had been affected.
However, a recent memo sent to tax organisations by David Ellis, from HMRC's Business Customer Unit, says: "Our contact centre has received roughly 50,000 calls about this matter and has estimated that there could be up to 100,000 people affected in total.
"If you receive any enquiries from your employees or pensioners about this please ask them to contact us in the usual way."
A separate memo sent by HMRC earlier this month admits: "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."
The problem comes from the introduction of a new system, which combines information on National Insurance contributions and Pay As you Earn (PAYE) for the first time.
In some cases, the system does not have correct information about earnings, meaning some people incorrectly being placed in the wrong tax band.
Almost all of those affected will not have realised the error until they notice a change on their monthly payslip.
John Whiting, Tax Policy Director at the Chartered Institute of Taxation, said: "Huge numbers of people were given the wrong tax codes by HMRC's new computer system.
"Revenue staff have worked incredibly hard to review three million records in March and April. But this situation should never have arisen in the first place.
"The Revenue's contact centres have been struggling to cope. HMRC bosses need to take a close look at whether they are adequately resourced for the future."
A spokesman for HMRC admitted the number of those affected was unknown because staff rectifying errors were not recording how many cases they had dealt with.
He said: "We apologise to customers who have received an incorrect coding notice. We issue millions of coding notices every year, mostly without any problems.
"We have recently introduced a major new computer system which will improve our ability to get people's tax codes right. Unfortunately with a project of this scale things will occasionally go wrong, and we have had some problems with codes this year. We make every effort to minimise mistakes but when they occur we sort things out as quickly as possible."
"We don't keep a central record of all the codes we revise, so we can't tell you the overall number of codes that have needed to be corrected.
"We are experiencing a higher level of demand than usual at present because of the well publicised issues around PAYE notices of coding.
"This means that some customers are finding it more difficult to get through than usual.
" To help minimise local rate callers' costs we regulate the numbers waiting. The majority of calls to our contact centres are either free or charged at local rate. It is standard practice within our contact centres to play busy messages when our telephony system recognises that the helpline is full.
"This ensures that customers 'on hold' do not wait in a queue for an unreasonable length of time."
