HMRC have huge problems on their hands with potential incorrect notices of coding being issued – all of which is down to new computer problems. How many times have we heard this and this isn’t have a go at HMRC Monday, it’s just getting predictably boring if it didn’t have the potential for serious consequences for some employees and pensioners.

They have stated that “work continues to identify and correct codes issued to individual taxpayers before the start of the tax year, with those most vulnerable to an overpayment being dealt with first.” – well that’s a relief isn’t it!

However, employers generally need to be aware as HMRC will shortly commence issuing notices of coding to employers. As a result of the issues encountered in January and February, forms P9 will not be issued at this point for a number of employees and pensioners where HMRC has already identified the presence of information on file which could lead to an incorrect code being issued. So employers may not receive as many notices of coding as they are expecting at first, because notices will not be issued to employers where HMRC expects more work is needed to establish the correct code. The instruction to employers is to continue to use the current tax code in 2010/11 if no revised code has been issued.

Now let’s see how this pans out when we have the full range of:

• employer compliance reviews
• PAYE investigations
• HMRC Tax investigations
• HMRC tax enquiries

Will compliance officers be adequately briefed when they are reviewing payroll records as to where the coding issues stemmed from or is it going to represent another costly exercise for the employer defending their position?