HMRC has responded to the Welsh government following reports of tax deduction errors among some Welsh taxpayers.
In a letter to Llyr Gruffydd, Chair of the Finance Committee at the National Assembly of Wales, Jim Harra, Deputy Chief Executive at HMRC, outlined that it had been made aware that some employers had not correctly applied ‘C’ tax codes.
Harra explained that HMRC had “engaged extensively” with employers and payroll software providers to ensure a smooth transition of the devolution of income tax in Wales. However, this had not been effective in all instances.
“It is disappointing that despite the engagement we had with employers, some have not applied codes correctly. In some cases, individuals have had the wrong amount of tax deducted.
“I understand that this was due to issues with the payroll software used by some employers and that employers affected in this way are correcting their systems and explaining the error to their employees,” wrote Harra.
“You will appreciate that there is a limit to what HMRC can do to ensure employers correctly apply the codes they are given for their employees in these circumstances. We believe we have a comprehensive programme of engagement and assurance and will keep this under review.”
Welsh taxpayer status came into effect in April and is identified with a ‘C’ code. This status is determined by residency using postcode information. If a HMRC customer lives in a Welsh postcode, as determined by Office of National Statistics postcode data, they will be flagged as a Welsh taxpayer.
Once identified as a Welsh taxpayer, HMRC issues a ‘C’ code to employers for them to make the relevant deductions on their employees’ behalf.
