HMRC has started sending out P800s as part of the 2013/14 end-of-year reconciliation process for individuals in PAYE. This compares the tax paid with the tax which is due, according to the information on HMRC’s records. All P800s should be checked for accuracy.
P800s will be going out to about 5½ m taxpayers in stages between now and September. According to HMRC, around 85% will have paid the right amount and will not receive any contact from HMRC.
Accountants Baker Tilly in their newsletter ask "...why are there more P800s this year, with RTI in full flow, than last year, when RTI was only a pilot? The number of PAYE differences has risen, not fallen. Something in RTI is not working, or the data collected promptly and accurately by RTI are not being processed promptly and accurately. RTI was supposed to make PAYE more accurate, not less, and save work, not create more."
The ICAEW suggest that there are a number of reasons why the tax deducted under PAYE will not be spot-on and the taxpayer will have an under- or overpayment. For example:
- The PAYE code is not up to date, does not contain all relevant details, or is otherwise incorrect.
- The code contains estimates of items such as other income, benefits-in-kind, pension contributions or gift aid donations, but the actual figures are different from the estimates.
- The taxpayer has several jobs or pensions taxed under PAYE or has moved jobs frequently and had gaps between periods of work.
- The taxpayer has started drawing a state pension during the year, which HMRC usually deals with by including an estimate of a year’s state pension in the PAYE code for a job or a private pension and applying that on a ‘month 1’ basis, which may give the correct deduction in some cases but not others.
- The code contains incorrect figures for underpaid tax from a previous year.
- The employer has made an error in operating PAYE.
- HMRC has made an error.
A particular issue is the high income child benefit charge (HICBC) which may be due where the taxpayer earns over £50,000 and the family receives child benefit. The HICBC will not be reflected in the P800 calculation unless the taxpayer submitted an SA return for 2012/13, as they should have done. If they submitted a 2012/03 SA return, they should also be issued with one for 2013/14 and the P800 should not be necessary.