HM Revenue and Customs has replied promptly to my question on whether it had over-reacted to the missing child benefit CDs by stopping its staff from sending faxes to employers of changes to taxpayers’ tax codes.
Until employers receive confirmation from HMRC of a change to a tax code, they must by law apply the last-notified code. One IT manager contacted me to say that the last tax code he’d received for an employee was incorrect and, if applied, would have meant the individual received no wages. After two CDs went missing with the details of 25 million people, HMRC officials would not send to the IT manager, by fax, a formal notice of the correct code.
I asked HMRC whether it had over-reacted to the missing CDs by banning faxes. An HMRC spokesperson said:
“Under our existing instructions, in very urgent and exceptional cases, a telephone call to the employer can be made and then a manual update may be faxed to the employer on the same day to confirm the authenticity of the code. This should be followed up with a written (or system issued) update.
“In the circumstances quoted, where someone would otherwise get no pay, we believe this is appropriate. In the current circumstances, some of our staff may be erring on the side of caution.”
In the event the IT manager received a notice of the correct tax code by electronic data interchange in time to pay the employee.
It’s a comfort to know that HMRC, given a chance to claim in tax more than an individual’s entire gross wages, did not seize the opportunity. On this occasion a happy outcome.