Tax codes for 2015/16 – how accurate are yours?

The last time that HMRC communicated with employees en masse was when the P800s were produced last summer for the year end 2013/14 reconciliations. At that time the total had gone up to 5.5m rather than dropped dramatically as had been the expectations post the implementation of RTI. Now we are in the throes of the annual coding run that issues employees with their 2015/16 tax codes and I’m getting some very worrying feedback. Employers and agents report the following:

  • Multiple codes issued on the same day that vary from K to D0 to BR, its not clear which if any are right as they are all dated the same day and in any case many are just straight L codes that should be being uplifted by the P9X without a P9 being issued let alone three at once!
  • Many codes being issued on a month 1 basis even though it is April
  • Codes being received for employees who left many years ago pre the move to RTI so were never even on the alignment submission

Of course the difficulty is codes are applied automatically by our payroll software so we won’t know the scale of the issues until our employees open their first payslip of 2015/16 and pick up the phone to …..well their employer or agent of course, followed by HMRC (if they can get through!).

It is quite clear to me that the scale of the corruption of data is even bigger than HMRC admitted to accounting web two weeks ago when they said:

‘since June 2014 HMRC has corrected duplicate employments on 112,000 employer schemes and corrected 1.3m duplicate employments relating to 628,000 individuals. HMRC is currently correcting 14,000 employer schemes covering 65,000-75,000 individuals on a monthly basis.’

If you have the time to look at the standard of coding before the inevitable deluge of employee phone calls it might be time well spent.

In the meantime the plan to use RTI data to pre-populate SA returns as announced in the Budget and to share it more widely within DWP to combat error and fraud which was also announced last Wednesday sounds like a very risky move if HMRC want to continue to maintain that there are really very few data issues and that once employers get the hang of RTI it will all be fine – I just hope HMRC get the hang of it soon too!