Confusing situation

Underpaid PAYE tax as a result of applying incorrect code

The taxpayer failed to amend the PAYE code for B for the years 2011/12 and 2112/13. HMRC issued determinations on the employer to collect the underpayment of tax that resulted. The taxpayer appealed.

It claimed to have been generally compliant with the PAYE regulations. Further similar mistakes had happened with three other employees but HMRC was not pursuing the employer for those underpayments.

The First-tier Tribunal said there was ‘considerable confusion’ about whether HMRC had notified the employer about the coding changes by email or whether it had to check for them on the Revenue’s website. HMRC said it had sent paper notices but the employer said none had been received.

Given the ‘general high compliance record’ of the employer that HMRC had not taken action to recover the underpaid tax for the other employees and it...