Supplementary memorandum from HM Revenue
and Customs
Questions 39-52 (Mr Bacon): How many
cases of coding notices being sent to the wrong tax agent. When
did the problem begin? When was it resolved? What was the nature
of the problem? Was the Information Commissioner informed of the
security breach?
During the introduction of our new computer
system last summer we provided relevant information to interested
parties, including agents' advisers and customer representatives.
This included regular updates for stakeholders about any emerging
PAYE issues which might affect them.
In September 2009, we were made aware of two
instances where data had been incorrectly sent to the wrong agent.
Two agents contacted us to advise that coding notices had been
incorrectly sent to their client's previous representative. When
the problem was reported, we investigated and found there was
an issue with the system design. Although the website shows this
as a current issue, I can confirm that it was fixed on 23 November
2009. Although only two individual cases were reported, we advised
the agent community so that any unreported cases could be quickly
identified. No further cases have since come to light.
The notices of coding which were misdirected
would have contained the taxpayer's name and address, their employer's
PAYE reference, their National Insurance number and details of
their tax code. They did not contain bank account or date of birth
details.
We also consulted our lawyers about the two
cases and they advised that on the basis that personal data was
accidentally sent to a person who was not authorised to receive
it; the two instances did amount to a breach. However, given the
number involved was low, the nature of the data and the fact that
it went to previous agents of the relevant taxpayers who owe duties
of confidentiality themselves, then their advice was that the
breach was not so serious as to merit reference to the Information
Commissioner's Office.
We take all security breaches very seriously
and as soon as we were aware that information had been sent to
the wrong agent, we acted as quickly as we could to resolve the
issue. We have apologised to the parties involved in both these
cases.
Questions 63-68 (Mr Bacon): More information
on the five forms people have to fill in to register as an employer
and operate the Simplified PAYE Deduction Scheme (para 3.23 refers).
A new employer who wishes to register for the
simplified scheme can do so by telephoning the HMRC Employer Helpline
giving their employee's name, address and National Insurance number
or date of birth. HMRC will then send the employer a new employer's
pack containing explanatory material and simplified tax deduction
tables.
Following registration, operating the Simplified
PAYE Deduction Scheme can, in exceptional circumstances, involve
completing up to five forms. Usually, only one or two forms have
to be filled in, either the P12 and the P37 if the employer
does not use an agent to file online on the employer's behalf,
or simply the FBI 2 if the employer does use an agent to
file online. The five forms are as follows:
— P16A—to notify HMRC about taking
on a new employee for whom PAYE must be operated. This form has
to be completed only if the employer takes on a different employee
after providing the Employer Helpline with details of their first
employee. Otherwise it is not required.
— P12—for each employee the employer
needs to complete a two page form on which they enter the employee's
name, address, date of birth and National Insurance number. For
each week, the employer records on this form the employee's pay,
income tax, National Insurance contributions, any statutory payments
made (such as statutory sick pay) and any student loan deductions
recovered.
— P37—An end-of-year declaration
that the information for all their employees is correct and has
been included. This requires only the employer's signature and
the date. Each completed P12 form is sent with this declaration.
On receipt of these forms, HMRC will prepare a notification of
tax and National Insurance deductions for the year and send that
to the employee.
— MS116—Request to an employer for
details of an employee's pay and tax where the end of year P12 has
gone astray. The form MS116 is not required in order to "register
as an employer and operate the Simplified Deduction Scheme".
The MS116 is provided by HMRC in limited circumstances; it
is a request for details of pay and tax where the original form
giving those details has gone astray. It is rarely used for this
type of employer.
— FBI2—Authority for an agent to
operate the online service on the employer's behalf.
Employers carrying out the work themselves would
normally only have to complete two forms.
The procedure is simplified if the employer
files online. This is because the software carries out all the
calculations for the employer. When they enter their employee's
details and gross pay on the electronic form, their tax, NICs
and net pay figures are calculated automatically. They are also
automatically set up to file the declarations needed at the end
of the tax year online and can print off the notification of tax
and National Insurance deductions to give to their employee themselves.
Questions 70-72 (Mr Bacon): The number of
older people that defer taking the State Pension
When people approach state pension age, they
must make a claim to DWP for payment of that pension. At the point
of claim, DWP inform HMRC when the payment of the state pension
is due to start and HMRC amend the claimant's tax code accordingly.
Assuming the payment of the state pension starts on the expected
date, the claimant will have the correct amount of tax deducted
from the outset.
In some cases, however, having made their claim,
the claimant may decide to defer the start date for the payment
of their state pension. In deferring their state pension, they
may choose to take the deferred amount as a lump sum, normally
at the time that payment of their pension begins, or to receive
an increased weekly amount of state pension 12 months later.
In the deferred cases, a number of different
things can happen:
— if a claimant chooses to take their deferred
pension as a lump sum, DWP notifies HMRC. When the lump sum is
paid, DWP deduct tax from the lump sum at the claimant's marginal
rate and notify HMRC of the payment made and the tax they have
deducted. HMRC use that information to calculate the pensioner's
end of year liability;
— if, instead, they choose to receive an
increased weekly amount of state pension then there is, at the
present time, no automatic data feed from DWP to HMRC about their
decision to defer. In these cases, HMRC will code out the amount
of state pension which DWP have notified to them and will then
collect the tax due and the person will overpay tax. In order
for these claimants to be paying the correct amount of tax, DWP
would need to amend their systems to provide HMRC with the data
they need. DWP do not currently have any plans to do this; and
— a claimant is, however, able to advise
HMRC of the deferral themselves and HMRC will remove the state
pension restriction from the coding.
DWP estimate that there are around 60 000 cases
a year where pension is deferred, normally because the person
does not make a claim.
Questions 84-87 (Geraldine Smith): The
results of the quantative customer survey asking what contact
method older people prefer and results from other Departmental
work such as exit interviews on whether people prefer contact
by telephone, face-to-face, letter or the internet.
HMRC has a number of approaches where we seek
to find out what customers thought of the service they received,
areas for improvement and what their preferences are in their
future dealings with HMRC:
— HMRC Customer Survey—A quarterly
survey covering all customer groups, including 2,000 individual
customers. The survey allows HMRC to understand how customers
rate their experience of dealing with the department. September
results showed that 77.5% of pensioners understood what they had
to do; 73.7% found the process easy to complete; 69.8% found it
easy to get in touch and 72.8% thought the service was designed
with their needs in mind.
— Exit interviews (face-to-face)—Overall
satisfaction for face to face service (Enquiry Centre) is 95%.
These results cut across all customer groups.
— Specific pensioner research—The
latest research, carried out by BMRB, reported in August 2009.
2,539 customers (pensioners, pre-pensioners and people in
transition) were included. Questions included asking customers
about their dealings with us, what channels they used and what
their preferences are. We also tested confidence levels and knowledge
about key tax issues. Specific findings relating to channel preferences:
PRE-PENSIONERS (CUSTOMERS CHOSE ALL THAT
WERE APPROPRIATE)
| | |
| | |
| Post | Phone
| In person | Internet
| Email |
| | |
| | |
| Finding out information or getting a response to a query
| 73% | 68% | 49%
| 46% | 42% |
| Filling in and returning a form | 83%
| 46% | 39% | 43%
| 36% |
| Getting a response to a query on personal tax affairs
| 84% | 59% | 47%
| 41% | 34% |
| | |
| | |
| | |
| | |
PENSIONERS
| | |
| | |
| Post | Phone
| In person | Internet
| Email |
| | |
| | |
| Finding out information or getting a response to a query
| 77% | 72% | 41%
| 22% | 23% |
| Filling in and returning a form | 87%
| 39% | 42% | 20%
| 19% |
| Getting a response to a query on personal tax affairs
| 86% | 63% | 39%
| 21% | 15% |
| | |
| | |
| | |
| | |
Questions 95 (Mr Mitchell): Details of the nearest
enquiry centre to Grimsby.
GREAT GRIMSBY
There are two offices in this constituency, both in Grimsby,
Heritage House (no Enquiry Centre) and Imperial House (Enquiry
Centre). Heritage House is to be vacated, Imperial House is to
be retained.
Questions 99-103 (Mr Mitchell): Figures on recent
contact centre performance and the improvements year on year.
HMRC is conscious that the lack of information on its telephone
services about approximate waiting times has the potential to
cause frustration to some customers. HMRC is currently investigating
the technical feasibility, as well as the costs and benefits to
the Department and its customers, of implementing this type of
service.
We are constantly looking for ways to improve the customer
experience. We have, for example, introduced a range of informative
initial messages this year which have resulted in many customers
being able to obtain the information they need quickly without
having to stay on the line to speak with an adviser. In addition
HMRC is piloting a call-back facility which, at busy times, allows
customers to leave their details so that a return call can be
made within a specific time frame. So far this year HMRC has answered
76% of all call attempts compared with only 52% in the same period
last year, and continues work towards the industry standard of
answering 90% of call attempts.
Question 124 (Chairman): Details of how much the Department
is investing in developing their services for older people (this
was in the context of £165,000 being given to the third
sector to help the Department provide information to older people
who are hard to reach—para 4.17 refers).
The £165,000 mentioned in the report refers to
2008-09 funding specifically issued to Third Sector organisations
dealing with older people and forms part of HMRC's Grant in Aid
funding of £2 million per financial year. Grants issued
to other Third Sector Organisations will also have helped older
people, though we don't record details separately. The grants
support a variety of local and national projects. We know that
for a particular section of pre and existing pensioners, often
the most vulnerable, third sector organisations are the preferred
source of information and advice. Specific grants for services
for older people include:
— Age Concern (£104k over two years)—produced
"your tax help check leaflet" to 32,000 people
(so well received more were produced and circulated); Web based
tax calculator is being produced.
— Tax Help for Older People (£240k given over three
years)—funding helped them reach 33% more customers; telephone
helpline received 9,645 calls (6,344 dealt by phone;
1,766 by surgeries & 1,535 by visits).
— Life Academy (£79k over two years)—Produced
workbook "Taxation at retirement" for 3rd sector organisations;
training advisers in third sector organisations.
In the majority of cases we do not separate investment in
developing services/products specifically for older people from
other customer groups; most of our processes, products and services
affect all customer groups. A figure for older people is therefore
not available, however specific recent changes include:
— P2 (Notice of Coding)—Separate P2s are
issued for each taxable source of income which causes confusion.
A flyer, which research shows all customers found helpful, explains
what to do, what it is used for and where to go for further information.
While P2 notices increased by 6% early feedback indicates
that calls are down by more than 25%.
— P161—Research showed low awareness of receiving/completing
the form; this is the main form used to get customers tax code
correct for retirement. Analysis of common errors made on the
form led to the P161 Help sheet; it explains why we ask for
the information and how best to complete the form to ensure they
receive the correct tax code. Latest results show a 9% reduction
in errors with some areas showing significantly more.
— R27—The key form for finalising the tax affairs
of someone who has died (Potential repayment to the estate).
We plan to publish a more sensitively-worded, clearer, more user-friendly
replacement in 2010.
In addition, wherever feasible, HMRC works with other Government
Departments and the Third Sector to improve our understanding
of customer needs and to inform changes to products and services.
6 January 2010
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