PAYE Coding Notice

[PTP]

I've received a coding notice where they've said they are reducing my allowance by £2,011 for 2012/2013 because "I have to pay tax on the value of benefits or expenses".

I thought that if an expense was "incurred wholly, exclusively and necessarily in performing duties" then it wasn't taxable. The expenses have been B&B accomodation and mileage mainly.

When I asked my accountant to discuss this with HMRC, the accountant said that HMRC have wrongly sent out a lot of these notices, and don't bother worrying about it because they will realise their mistake when they see your tax return.

Has anyone else ever ignored these notices and then after the tax return HMRC have accepted that you should've still had full allowance and were right to igore their notice?

Thanks

[Jessica@WhiteFieldTax]

I've received a coding notice where they've said they are reducing my allowance by £2,011 for 2012/2013 because "I have to pay tax on the value of benefits or expenses".

I thought that if an expense was "incurred wholly, exclusively and necessarily in performing duties" then it wasn't taxable. The expenses have been B&B accomodation and mileage mainly.

When I asked my accountant to discuss this with HMRC, the accountant said that HMRC have wrongly sent out a lot of these notices, and don't bother worrying about it because they will realise their mistake when they see your tax return.

Has anyone else ever ignored these notices and then after the tax return HMRC have accepted that you should've still had full allowance and were right to igore their notice?

Thanks

Sort of.

I presume you are in Self Assessment? In which case what goes on your Self Assessment Return - aka tax return - will supercede the coding notice. SAR is definitive, coding a blunt instrument for collecting what's thought to be the correct tax during the year for PAYE cases.

If you are on a low salary / high dividend arrangement then the coding may well make little difference.

That said, it ought to be correct, so you or your accountant need to ask HMRC to take the expenses out - its no big issue, HMRC will willingly do it. They are in there as they tend to get pulled in automatically by HMRC - have done for years.

In extremis just ignore the code and use a made up correct one; only problem is that option will end next April when RTI comes in, which is why some of us are fearing the worst and the opportunity for fiasco.

HTH

[Acme Thunderer]

I had a couple of problems with mine. My accountant contacted them and got it sorted out. Just leaving it until you fill in your self assessment doesn't seem right. What if they don't pick it up when the SA comes in?

[PTP]

Thanks Jessica & Acme

[SarahL2012]

Get them to correct it

Hopeless trying to reach them by phone, but letters usually do the trick if you don't mind waiting. It also means you've got an audit trail if they try to chase you for tax years down the line.

[Jessica@WhiteFieldTax]

Hopeless trying to reach them by phone, but letters usually do the trick if you don't mind waiting. It also means you've got an audit trail if they try to chase you for tax years down the line.

Agree, much prefer letters.

In my "spare time" I do voluntary tax work for OAPs - in theory that gives me a special HMRC helpline which by passes some aspects of confidentiality and gets in touch with crack HMRCers to sort out my old dears pension woes. In reality its often easier to write - in fact I sometimes wonder if I should just skip the initial letters and send the complaint I will always end up making...

[xoggoth]

the accountant said that HMRC have wrongly sent out a lot of these notices, and don't bother worrying about it because they will realise their mistake when they see your tax return

It was a few years ago, but having been in a similar situation, I rather doubt that. They were taking no notice of my tax return and when I queried why not they indicated it was my duty to inform them if I no longer had these "benefits". You need to ring/write them and point out their error.