HM Revenue and Customs has been in the news twice this week and neither report has been favourable.
At one extreme they have been questioned in parliament about letting Goldman Sachs, the investment bank, off a £10m interest charge when settling the tax due on an alleged tax avoidance scheme.
Whilst this may have a small cost to all taxpayer, their second problem will be more significant to many individuals, for good or bad. For the lucky ones, this will mean that they have the pleasant surprise of a small refund from HMRC in time to help with buying Christmas presents. However, for the unlucky ones this will mean getting a bill from HMRC saying that insufficient tax has been deducted from their salary and they owe more (probably a few hundred pounds).
These errors (or as HMRC probably describe them adjustments) arise from the way the Pay As You Earn system works, particularly when you receive benefits from your employer (a company car, medical insurance and other items) and the time scale for HMRC to receive the information from employers.
In this case though it appears that, earlier in the year, HMRC made refunds and may now be want these back having processed more information.
We still find that for most taxpayers who submit Self Assessment Tax Returns the system works smoothly. Unfortunately, it often works less well for those within the PATE system who do not submit Tax Returns. The key things people can do to make sure they are not losing out are :
· Check you payslips regularly and particularly when your pay changes
· Make sure you understand how the tax (PAYE) deduction is calculated
· If you think the figures are wrong check them by speaking to HMRC or an accountant, your employer may also be happy to help
· If you are due a refund contact HMRC immediately and if you need to submit a Tax Return do this promptly and if possibly electronically
· If you owe tax, contact HMRC as soon as possible (so the debt does not grow) and ask them if you can settle it over time (whether through PAYE or by monthly payments to HMRC).
