Taxation: Self-assessment and PAYE

Treasury written question – answered on 10th February 2010.

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Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

To ask the Chancellor of the Exchequer

(1) how many (a) Pay-As-You-Earn and (b) self-assessment cases remained open during (i) 2006, (ii) 2007, (iii) 2008 and (iv) 2009;

(2) when the most recent audit of open P14 cases was undertaken; and what statistics were collected for the purposes of that audit;

(3) when the most recent audit of open PSN cases was undertaken; and what statistics were collected for the purposes of that audit.

Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

The terms "open PSN case" and "open P14 case" are not used by HM Revenue and Customs (HMRC).

PAYE open cases arise when HMRC is unable to match the pay and tax details submitted by their employer on form P14 to an individual's tax record or a match is made but the pay and tax do not reconcile and further work is needed to establish the correct tax position. This is a normal part of the PAYE process.

The most recent internal audit review of PAYE open cases took place in March 2009, and reviewed the accuracy of clearance of 2007-08 PAYE open cases. HMRC's internal audit function checked a sample of cases and found that the accuracy achieved in clearing open cases was 95 per cent.

HMRC do not use the term "open cases" in relation to self-assessment. Under self-assessment a case is cleared once the self-assessment tax return has been filed.

Information on the number of open PAYE cases is available at:

For 2005-06 and 2006-07-25 June 2007, Hansard, column 388W.

For 2007-08 and 2008-09 in HMRC's Annual Accounts:

http://www.hmrc.gov.uk/about/hmrc-dep-acct0708.pdf

http://www.hmrc.gov.uk/about/hmrc-accs-0809.pdf

From 2009, the introduction of the new National Insurance and PAYE Service (NPS) will automate matching and processing of data sufficient to reduce the number of cases needing clerical intervention (exception cases) to less than 4.5 million each tax year. HMRC aims to clear these cases during the same year in which they occur so backlogs should no longer accrue.

For the open cases existing when NPS went live HMRC have three pieces of work planned to reduce the existing open cases:

1. An Open Case Clearance Project in PAYE/SA Processing that deploys software to identify cases where an under or overpayment is due, or where the record is accurate and can be closed.

2. HMRC is working with an independent firm, on those open cases which are open because they do not appear to match to an existing record, to data match open cases with a wider range of data.

3. The Department will risk assess the remaining cases, prioritising those where repayments may be due, before starting a clerical review of the remaining cases in April 2010, which will continue until all backlogs have been worked.

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