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Taxpayers to check their own tax code?

By December 12, 2014June 13th, 2017No Comments

HM Revenue and Custom’s plans to pass the responsibility of checking tax codes are correct on to the public, has been greeted with protests from angry taxpayers.

HMRC has released proposals that will pass the responsibility to taxpayers to check that they have the correct tax code; Plans which have caused tax campaigners and accountants to argue that doing so will only make taxpayers liable to pay for mistakes made by the taxman.

The tax code row is centred on the Extra Statutory Concession A19, in HM Revenue and Custom’s handbook. The rule means taxes canCould you be responsible for your own tax code? be waived if a taxpayer has provided sufficient information, but a tax official has failed to use it correctly to calculate the individuals’ tax bill.

Under this rule, ‘sufficient information’ provided by the taxpayer requires for them to ‘reasonably believe’ their tax affairs were in order. HMRC has challenged this rule under to desire to replace ‘reasonable belief’ with taxpayers being held responsible for checking their tax code, rather than the taxman.

But is placing the responsibility of checking your tax code onto the taxpayer a good idea?

HM Revenue and Customs deal with PAYE coding every single day, whereas the taxpayer who works in a different trade will be faced with tax codes only once a year, and probably have no clue how they work either. Will this not just cause more people to ‘hang on the telephone’ to get through to HMRC?

Director General of the financial services group, Saga, that caters for over-fifties, Ross Altmann, said:

“Ordinary taxpayers should not be expected to know more about their tax liabilities than the Revenue, which has been given all the relevant information. If a tradesman tells you that your bill for a job is £100, you pay the £100. You don’t expect him to come back next year and say ‘Sorry, that bill was wrong, you actually owe me £150’.”

Altmann argued that the change of responsibility is an attempt from HMRC to ‘lay the blame’ for their mistakes on taxpayers shoulders, which he deems ‘unacceptable’.

In 2010 HMRC officials failed to collect the correct tax from 1.4 million people because of incorrect tax codes. It is estimated that arrear demands averaged £1,428. Also, in 18 months running up to March 2012, tax offices using A19 rules scrapped demands sent to taxpayers totalling £52m.

The new A19 rules can be found on HMRC’s website and comments can be emailed to paye.policy.hmrc.gsi.gov.uk.