Scottish Taxpayers – are you receiving “S”-codes?

It has come to our attention that some Scottish taxpayers are incorrectly receiving tax codes for 2016/17 that do not contain the “S” prefix. Please let us know if 2016/17 tax codes that you receive for Scottish taxpayer clients are correct in terms of determining their Scottish taxpayer status.

HMRC have started to issue tax codes for the 2016/17 tax year. HMRC previously sent out Scottish taxpayer notification letters in December 2015 to those individuals they identified as being Scottish taxpayers. The expectation was that the coding run for 2016/17 would include the issue of tax codes to Scottish taxpayers, and that those taxpayers would receive “S” codes – their tax code would feature an “S” prefix.

Not all Scottish taxpayers will receive a coding notice, since the “S” code is not a trigger for the issue of a form P2 coding notice – thus only Scottish taxpayers in receipt of a P2 coding notice for some other reason, such as the inclusion of a taxable benefit in kind or a new source of taxable income will receive a notice.

Unfortunately we are receiving reports from some members that some of their clients, who they believe are clearly Scottish taxpayers, have received coding notices showing tax codes that do not incorporate the “S” prefix. It appears that affected clients may also not have received a Scottish taxpayer notification letter in December 2015.

HMRC indicate that they identified Scottish taxpayers on the basis of the addresses they hold for individuals. The issue appears to involve individuals whose only or main address is in Scotland, and whom HMRC already correspond with at that address in Scotland.

What do HMRC say?

CIOT have contacted HMRC about the issue and they have provided us with the following information:

“It is important for us to issue the correct tax codes to ensure that the right amount of tax is deducted and know that the right government receive the funds. If the Notification letter or S coding S codes have not been received we would encourage customers who think they have the wrong tax code to check the guidance on "Who is a Scottish taxpayer" and then get in touch to update their details if they believe that they have the wrong code.”

What should I do?

If this issue affects your clients, you should double-check what you think their status should be. You can either use HMRC’s guidance, or you may also find the guide on the LITRG website of assistance. If you still think that the coding is incorrect, contact HMRC. Make sure that they have the correct address for your client.

It would also be helpful if you could let us know if you come across this issue attechnical [at] att.org.uk.

Technical Team

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