[UK] PAYE staff code delay causes Treasury loss of tens of millions in tax payments

The UK Treasury has experienced significant delays collecting tens of millions of pounds in tax payments following failures by officials to issue employment details to firms taking on new staff, i reports.

At present, the UK’s national debt almost outstrips the Treasury income and interest payments are at record highs. In the midst of this, HMRC has left both employers and their staff waiting up to 42 days before issuing Pay As You Earn (PAYE) reference numbers.

The delays have affected hundreds of thousands of employees beginning new jobs and have reportedly left many people unable to secure mortgages or loans before the interest rate rises over recent months, meaning any lending they wish to apply for will now be considerably more expensive.

The issue has led to delays in tax collection and is causing distress for employers and employees, according to leading tax and advisory firm Blick Rothenberg.

Andrew Sanford - a partner at Blick Rothenberg - said, “We are aware that many clients have been waiting weeks and months for a reference.

“In order to set up a payroll, all employers need a PAYE reference to be assigned by HMRC. No tax can be paid over to HMRC until the PAYE reference number is obtained and payroll slips issued to employees will at best be incomplete.”

The problem reportedly emerged at the beginning of the current tax year in April and, despite reducing the wait times, the initial delays have continued to have a knock-on effect.

The Government advises that it should take up to just five days to get a PAYE reference number, but HMRC has confirmed that the delays have meant a wait of up to 42 days since April. It is understood that the wait for a PAYE number has been cut to around 12 days, however, this is still a week more than the Government advises it should take.

A spokesman for HMRC told i, “We swiftly improved wait times for PAYE reference numbers – cutting them by more than half in two weeks. However, we are sorry to those who were affected whilst we were recovering the service.”

Mr Sanford said the delays may be a result of staff shortages and that to assist with the backlog of letters and calls chasing the reference numbers some employers are being told to reapply for them.

Since the pandemic-related advice to work from home where possible was removed on January 19, HMRC staffing levels in its London offices on Parliament Square have been as low as 11 per cent. They reached a peak of 58 per cent in May but the figure fell back to 47 per cent last week.

Hybrid working is reportedly now a permanent fixture for HMRC staff, who are allowed to work from home for two days per week subject to operational requirements.

Mr Sanford said, “Employees applying for a mortgage are unable to produce payslips to verify their earnings. This could cost them real money as with rising interest rates they could miss out on fixed rate mortgage deals, through no fault of their own.

“We have also seen instances of employers being unable to get Employer’s liability insurance, which is a legal requirement, and thus not affording the protection to their employees.

“HMRC need to rectify this matter urgently so that much-needed tax revenue flows to the treasury and employers and employees do not face the problems they are having to deal with.”

The HMRC spokesman said, “There was no loss in tax revenue. Overall customer satisfaction is above 80 per cent and we’re recruiting more staff to improve areas under pressure.”

Source: i

(Link and quotes via original reporting)

The UK Treasury has experienced significant delays collecting tens of millions of pounds in tax payments following failures by officials to issue employment details to firms taking on new staff, i reports.

At present, the UK’s national debt almost outstrips the Treasury income and interest payments are at record highs. In the midst of this, HMRC has left both employers and their staff waiting up to 42 days before issuing Pay As You Earn (PAYE) reference numbers.

The delays have affected hundreds of thousands of employees beginning new jobs and have reportedly left many people unable to secure mortgages or loans before the interest rate rises over recent months, meaning any lending they wish to apply for will now be considerably more expensive.

The issue has led to delays in tax collection and is causing distress for employers and employees, according to leading tax and advisory firm Blick Rothenberg.

Andrew Sanford - a partner at Blick Rothenberg - said, “We are aware that many clients have been waiting weeks and months for a reference.

“In order to set up a payroll, all employers need a PAYE reference to be assigned by HMRC. No tax can be paid over to HMRC until the PAYE reference number is obtained and payroll slips issued to employees will at best be incomplete.”

The problem reportedly emerged at the beginning of the current tax year in April and, despite reducing the wait times, the initial delays have continued to have a knock-on effect.

The Government advises that it should take up to just five days to get a PAYE reference number, but HMRC has confirmed that the delays have meant a wait of up to 42 days since April. It is understood that the wait for a PAYE number has been cut to around 12 days, however, this is still a week more than the Government advises it should take.

A spokesman for HMRC told i, “We swiftly improved wait times for PAYE reference numbers – cutting them by more than half in two weeks. However, we are sorry to those who were affected whilst we were recovering the service.”

Mr Sanford said the delays may be a result of staff shortages and that to assist with the backlog of letters and calls chasing the reference numbers some employers are being told to reapply for them.

Since the pandemic-related advice to work from home where possible was removed on January 19, HMRC staffing levels in its London offices on Parliament Square have been as low as 11 per cent. They reached a peak of 58 per cent in May but the figure fell back to 47 per cent last week.

Hybrid working is reportedly now a permanent fixture for HMRC staff, who are allowed to work from home for two days per week subject to operational requirements.

Mr Sanford said, “Employees applying for a mortgage are unable to produce payslips to verify their earnings. This could cost them real money as with rising interest rates they could miss out on fixed rate mortgage deals, through no fault of their own.

“We have also seen instances of employers being unable to get Employer’s liability insurance, which is a legal requirement, and thus not affording the protection to their employees.

“HMRC need to rectify this matter urgently so that much-needed tax revenue flows to the treasury and employers and employees do not face the problems they are having to deal with.”

The HMRC spokesman said, “There was no loss in tax revenue. Overall customer satisfaction is above 80 per cent and we’re recruiting more staff to improve areas under pressure.”

Source: i

(Link and quotes via original reporting)