HMRC have published the summary of responses on the secondary legislation required to implement the proposal to collect more HMRC debts through PAYE and to increase the coding threshold from £2,000 to £3,000.
HMRC UPDATE
5 August 2011 Following your feedback from weekly Update 73 (22 July), we would like to clarify a number of points which may help employers answer questions from employees. HMRC will consider collection of debts through the tax code if other attempts to secure payment have failed and/or the taxpayer has not responded to previous letters. Therefore the “coding out” letter will not be the first letter the taxpayer receives. The letters to SA taxpayers will be headed “Self Assessment amount overdue: £ (amount).” A Statement of Liability will be enclosed showing a summary of the debt(s), the interest accrued to date, and the daily interest accrual rate. Any accrued interest will be dealt with separately, and will not be collected through the tax code reduction. Our letters will say that we are considering collecting the debt by this method. Any taxpayer who has concerns about this, should contact us on the number shown on the letter. We will be selecting some 2009/2010 debts when we start to issue letters to SA taxpayers in August. Although the 2009/10 liability was only due in January 2011, the debt will be over 12 months old by the time the debt starts to be recovered from the code in April 2012. This is in line with the information we provided in the Summary of responses document where we stated that “sums collected via coding are likely to be at least 12 months old. The taxpayer would therefore have had the opportunity to discuss settlement options with HMRC well before a debt is collected via PAYE coding out. For SA debts, if HMRC successfully collects the whole amount through the tax code, then interest will accrue from the original due date until the 5 April from which the code is reduced. For example, a debt due on 31 January 2009 which is successfully collected through the tax code from 6 April 2012 will attract interest from 1 February 2009 until 5 April 2012. Interest will be finalised and charged once we have collected the amount due in full, and the taxpayer will be notified of this in the Coding Out letter. Should HMRC not be successful in collecting the full amount of the debt through the code, then interest will accrue on any uncollected sum until we do get final settlement. We will write to the taxpayer with details of any interest charges after we have received final payment. The Annual Coding Notice will have a separate entry for any debt to be collected through the code. The sum due will be described as “Outstanding debt”. There will also be a note added providing details of the type of debt (Tax Credit or SA) and explaining how the code has been calculated. The form will not give a breakdown of the year(s) to which the debt relates. This will be the only information on the Annual Coding Notice relating to coding out debt. Any taxpayer can appeal against a coding notice on the basis that it is incorrect. We encourage anyone who believes that the code shown on the form is wrong to contact HMRC as soon as possible.
Employer Annual Return UPDATED GUIDANCE ON CORRELATION ID
CIPP Policy News Journal
09/10/2012, Page 114 of 234
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