ICAEW flags up inaccuracies in PAYE tax calculations
ICAEW is warning of early reports of issues with HMRC’s calculations of under or over payments as part of the commenced the annual reconciliation of taxpayers’ PAYE records for 2017/18
9 Aug 2018
The institute’s tax faculty says it has started to receive the first reports of incorrect P800 tax calculations and incorrect PA302 simple assessments.
One issue being reported relates to the use of estimated figures where actual figures are not available for certain computations. These include interest income of less than £10,000; dividend income of less than £10,000; rental or other income of less than £2,500; gift aid; pension contributions; and employment expenses of less than £2,500.
ICAEW says the estimates are often based on the last self assessment tax return submitted to HMRC (which may be some time ago) or a figure provided to HMRC by the taxpayer or their agent which may also be out of date. The tax faculty has had discussions with HMRC about the risk of these estimates resulting in incorrect calculations but HMRC does not currently accept that there is a significant compliance risk.
There are concerns around P800 calculations or PA302 simple assessments issued to taxpayers who are in self assessment, where there are examples of duplicate calculations.
HMRC advises that the main reason for duplicate calculations issued by both of the self assessment and National Insurance and PAYE service systems is the filing of voluntary self assessment tax returns. HMRC has asked agents and taxpayers to check that registration for self assessment is in place before filing a tax return, and to re-register if necessary, to avoid this type of error.
In addition, a second reason has been identified, in circumstances where a taxpayer in self assessment (eg, because they are self employed or have income from property) who has not had a PAYE source of income for a number of years starts receiving income from a new PAYE source, such as an employment or a pension. HMRC’s systems do not link the new PAYE record to the self assessment record and, therefore, issue duplicate calculations.
Finally, ICAEW is also aware of instances where data from employer RTI submissions is not feeding through correctly to the employee record. The tax faculty says it would be particularly interested in details of any cases where tax calculations received by employees do not reflect the information submitted by the employer to HMRC.
The institute is seeking members’ feedback on their experience of the accuracy of PAYE tax calculations, and suggests details of specific cases can be shared with ICAEW provided the taxpayer gives consent. Information should be sent to firstname.lastname@example.org and email@example.com.
Report by Pat Sweet