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Warning over PAYE code errors

30 October 2013
Categories: News , PAYE , Roy Maugham , Admin , Employees , Income Tax

Two in five workers could be paying wrong tax, claim accountants

Errors by HMRC mean almost two in five taxpayers could be in danger of having the wrong amount of tax taken from their pay packets, according to UHY Hacker Young.

Analysis by the national accountancy group of PAYE codes sent to clients shows that around 37% would have resulted in people giving up either too much or too little to the taxman.

The issue of great concern because most taxpayers will not question them, said partner Roy Maugham, who attributed the errors mainly to instances in which an individual has more than one source of income – an investment as well as a salary and benefits, for example – or where he or she has received a large one-off sum such as a dividend payment.

Maugham added, “HMRC really needs to make more of an effort to eliminate these errors because, generally, people trust the department’s calculations and assume they are paying the correct amount of tax.”

Errors in processing tax on benefits in kind, including company cars and private health cover, are another significant reason for the erroneous PAYE codes, UHY Hacker Young’s study suggests. One of the firm’s local offices recently saw in a single week errors relating to benefits provided by employers to 20 different clients.

The code provided by the Revenue in most cases failed to account for the tax due on the benefits. Such a mistake could mean individuals are underpaying their tax by thousands of pounds, warned Roy Maugham.

He said, “Benefits and expenses are part of standard packages for millions of private sector employees. Their tax affairs are not necessarily complex, and, in most cases, they won’t use an accountant to check whether they are paying the correct amount.”

Categories: News , PAYE , Roy Maugham , Admin , Employees , Income Tax
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