HMRC have provided a further informal update on PAYE related matters for sharing. The update covers collecting small debts through PAYE.
Collecting Small Debts through PAYE
From April 2012 HMRC will start to collect some Self Assessment (SA) and Tax Credit (TC) overpayments to the value of £2999.99 by amending the tax code of individuals in PAYE employment or receiving a UK based pension.
We have previously written to the individuals concerned explaining that their debts or overpayments may be collected by tax code adjustment from April 2012. They were given a final chance to either pay in full or contact us to discuss other payment options.
The first PAYE coding notices to include these debts were issued between January and March this year with deductions from salaries starting in April 2012. A SA debt or tax credit overpayment was described on the P2 Annual Coding Notice as “Outstanding debt” with a note to say whether it was SA tax, a tax credit overpayment or both.
HMRC may charge interest on any debt which remains outstanding or if the arrangement to code out is no longer an option. If this occurs then we will write asking for payment of any interest charges at a later date. We do not charge interest on tax credit overpayments.
HMRC will not change tax codes in year to recover these debts or overpayments. They will always be included in the code issued for the start of the tax year, and will only be amended if we have been notified of a change in circumstances.
Safeguards already exist to prevent excessive deductions from salary via PAYE; these will still apply to HMRCs ability to code out debts.
Remember in future, if you, your clients or your staff think you will have any difficulty in making your tax payments in full and on time, please contact HMRC before the payment is due so that we can help. Our Business Payment Support Service is available for individuals and businesses who have not yet received a payment demand, on 0845 302 1435. Opening hours are Monday to Friday 8.00 am to 8.00 pm, Saturday and Sunday 8.00 am to 4.00 pm, excluding bank holidays.