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PAYE

Volume 505: debated on Wednesday 10 February 2010

To ask the Chancellor of the Exchequer (1) what the outcomes were of the HM Revenue and Customs annual review of errors in respect of automatically-processed Pay-As-You-Earn in (a) 2006, (b) 2007, (c) 2008 and (d) 2009; (312150)

(2) what the all-cases accuracy rate was for (a) self-assessment and (b) Pay-As-You-Earn for (i) 2006, (ii) 2007, (iii) 2008 and (iv) 2009;

(3) how many (a) self-assessment and (b) Pay-As-You-Earn cases were processed manually in (i) 2006, (ii) 2007, (iii) 2008 and (iv) 2009;

(4) what the accuracy rate was for (a) Pay-As-You-Earn and (b) self-assessment cases processed (i) automatically and (ii) manually in (A) 2006, (B) 2007, (C) 2008 and (D) 2009;

(5) what the tax effect accuracy rate was for (a) self-assessment and (b) Pay-As-You-Earn for (i) 2006, (ii) 2007, (iii) 2008 and (iv) 2009;

(6) what the causes were of the tax effect errors in the (a) self-assessment and (b) Pay-As-You-Earn system in (i) 2006, (ii) 2007, (iii) 2008 and (iv) 2009;

(7) how many P35s were manually processed in (a) 2006, (b) 2007, (c) 2008 and (d) 2009;

(8) what the tax effect error percentages for the collection of national insurance through PAYE were in (a) 2006, (b) 2007, (c) 2008 and (d) 2009.

The number of self assessment (SA) and Pay as You Earn (PAYE) returns processed manually is set in the following table.

Tax return yearPAYE End of year returnsSA

P35

P14

Individuals

2005-06

539,150

3,798,120

4,988,969

2006-07

370,736

3,413,174

4,118,006

2007-08

277,045

2,039,303

2,314,728

2008-09

197,592

1,766,424

1

1 Not yet available

The requested information on accuracy rates is set out in the following table. HM Revenue and Customs do not use the concept of ‘tax effect errors’ in the context of national insurance contributions.

Percentage

PAYE

All cases accuracy

Automatic process accuracy

Manual process accuracy

Tax effect accuracy1

2005-06

94.7

n/a

79.9

79.9

2006-07

95.1

99.8

82.1

82.1

2007-08

95.1

99.8

83.4

83.4

2008-09

96.2

99.8

83.5

83.5

1 The PAYE tax effect accuracy results relate to those cases which require a manual intervention and which have been accurately processed to within £1.

Many of the SA cases recorded as not processed accurately will be due to the coding number not being reviewed. In the majority of cases, the coding error is corrected when the SA return is submitted and the taxpayer's tax calculation will ensure the correct amount of tax has been paid.

Percentage

SA

All cases accuracy

Automatic process accuracy1

Manual process accuracy

Tax effect accuracy2

2005-06

75.3

n/a

75.3

96.5

2006-07

78.1

n/a

78.1

96.5

2007-08

80.5

n/a

80.5

97.6

2008-09

81.5

n/a

81.5

97.0

1 There is no information available for SA cases processed automatically because the assumption is that they process with near 100 per cent. accuracy.

2 The self-assessment tax effect accuracy relate to those self-assessment taxpayers whose tax bill is accurate to within £1.

The main causes of tax effect errors is provided on page 20 of the National Audit Office publication “Accuracy in processing Income Tax”, available at:

http://www.nao.org.uk/publications/0607/accuracy_in_processing_income.aspx

To ask the Chancellor of the Exchequer whether he has made an assessment of the merits of collecting income tax from state pensions through the PAYE system. (316502)

No such assessment has been made.

The majority of pensioners have their state pensions appropriately taxed through the operation of Pay-As-You-Earn on their other sources of income.