Tell the Tax Faculty about errors in PAYE calculations

HMRC has almost completed the PAYE reconciliation process for 2016/17. We are aware of the following categories of errors and would welcome details of specific recent cases to feed back to HMRC.

  • P800 calculations or PA302 simple assessments issued to taxpayers who are in self assessment

HMRC advises that the main reason for duplicate calculations issued by both self assessment and NPS (National Insurance and PAYE service) is the filing of voluntary self assessment tax returns. HMRC is asking 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.

A second reason has been identified: 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 are not linking the new PAYE record to the self assessment record and, therefore, issuing duplicate calculations.

Please send details of any duplicate calculations received since the beginning of October 2017 to caroline.miskin@icaew.com. These will help HMRC in the work it is doing to prevent such errors.

  • Interest showing on P800 and PA302 calculations as net

The Tax Faculty has received reports of a number of cases of P800 calculations incorrectly showing interest having been received net rather than gross. Following the change to the rules for deduction of tax from interest in April 2016 HMRC did carry out an exercise to correct taxpayer records for this legislative change but some cases were missed. HMRC has now identified the cases affected and is investigating these and considering the next steps.

  • Estimated figures in P800s and PA302 calculations

It is standard HMRC practice to use estimated figures for the following items in P800 calculations where actual figures are not available:

  • 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
  • Employment expenses of less than £2,500

The estimates are generally 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to HMRC (which may be some time ago) or a figure provided to HMRC by the taxpayer or their agent which may be equally out of date. The use of estimates in this way is on the Tax Faculty’s agenda for discussions with HMRC and examples would be welcome by email to caroline.miskin@icaew.com.

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