Why are HMRC obsessed with works numbers?
We now know that one of the key factors in the debacle around tax codes at the start of the tax year was the design of the new National Insurance and PAYE System (NPS) and its over-reliance on works numbers. Every time the system spots a variation in a works number it erroneously assumes that the person has a second job with the same employer – hence the proliferation of BR tax codes. It’s obviously not going to be a quick fix to turn off this logic as one HM Revenue & Customs’ (HMRC) latest circulars to employer groups, from David Ellis Head of the Business Engagement Team, carries this most peculiar plea to avoid employers causing tax code inaccuracies:
‘It is important that the same works number on the P14 is also shown on the P46/P45(3), as different numbers can cause a data mismatch for HMRC resulting in duplication of records. The effect for employers is unnecessary correspondence from HMRC, increased administrative burden and unmatched employer data against HMRC systems.‘
Excuse me but why do HMRC expect works numbers to be static? For many employers the works number contains digits that refer to an internal cost centre, hence when an employee moves jobs internally their number changes, so of course it won’t be the same as the number when they were recruited years previously – in some businesses it may change almost annually as a result of restructuring and career moves. If only HMRC had asked the employer representative bodies if using works numbers as a match was a good idea before designing a system around them perhaps some of the current issues for taxpayers and the admin burden for employers of wrong tax codes could have been avoided. HMRC’s good work in consulting with employers gets undone when fundamental decisions such as this bypass the forums they have set up to scrutinise them.
Kate Upcraft
Payroll writer and lecturer
ISIS Support Services Ltd
kateupcraft@btconnect.com
