PAY AS YOU EARN
6. In March 2009, we expressed concern that the delays
in transferring PAYE processing to the National Insurance Recording
System would add to the backlog of PAYE cases that require manual
working. The Department's systems identify these cases when the
automated processing of employers' annual returns of pay and tax
deductions from individuals raises doubts about whether the right
amount of tax has been paid or there are difficulties matching
information to a taxpayer's record. We recommended that the Department
establish a strategy and a timetable to deal with, and eliminate,
the backlog in PAYE cases awaiting checking.[17]
The Department made the transfer to the National Insurance Recording
System in June 2009. This has brought all the information on an
individual's income together for the first time. This helps to
ensure they are paying the correct amount of tax.[18]
7. During 2008-09, in preparation for this transfer,
the Department reduced the number of cases requiring clerical
intervention from 30 million to just under 17 million.[19]
The Department will start clearing the backlog in April 2010,
once the modernised PAYE system is fully functional. In some cases
people will owe tax and in others people may be entitled to a
refund of tax. The Department is working to identify these cases,
and those which are cost effective to work manually and in what
order.[20]
CORPORATION TAX
8. The Department also faces a build up of Corporation
Tax 'postponements'. The calculation of a Corporation Tax liability
can be postponed when a company appeals against the Department's
view of its tax liability, or when the Department believes that
a company's tax assessment will be reduced.[21]
The value of postponements at the end of March 2009 was over £10
billion. £4.6 billion of postponements are over 10 years
old, in some cases over 16 years old.[22]
The Department has not actively monitored the high volume of low
value cases and so these cases have built up over time.[23]
9. Postponements can be complex and difficult to
resolve.[24] It is important
that the Department puts in place effective case management, oversight
and accounting processes to ensure that cases are settled, and
companies given certainty about their tax affairs, on a timely
basis. The Department has stated that, since early 2008, it has
been reviewing its treatment of postponements and is developing
a long term response but, over a year and a half later, this response
remains unclear.[25]
17 Committee of Public Accounts Fourteenth Report of
Session 2008-09, HM Revenue and Customs: Tax Credits and Income
Tax, HC 311 Back
18
C&AG's Report, para 1.20 Back
19
Q 5 Back
20
Q 6 Back
21
C&AG's Report, paras 3.11 and 3.12 Back
22
Q 10 Back
23
C&AG's Report, para 3.30 Back
24
Q 9 Back
25
C&AG's Report, para 3.30 Back
