More than 2 million taxpayers have had a letter telling them that they will pay the new Scottish rate of income tax from April 2016.
But thousands of the taxpayers believe the move is a shambles because they rate is not applicable to them but they cannot get HM Revenue & Customs (HMRC) to move them back again because the letters have no contact details.
Even worse, taxpayers who do not receive their letter will not even know they are paying the Scottish rate of income tax until they open their first pay packet in the new tax year.
HMRC claims officers have spent more than a year grabbing names and addresses from payroll data filed by employers and crosschecking them against electoral rolls and the Royal Mail postcode database.
Flawed tax procedures
But experts like Kate Upcraft of the blog Payroll Unplugged believe HMRC’s system is flawed because software developers may not have programmed their applications to send the tax authority full address details or that correspondence may go to an address where the recipient does not actually live.
For example, the employee address may be for a student in term time or for a carer who temporarily lives at someone else’s home.
The rate is due to be set on December 16, 2015 during the Scottish Assembly Budget.
The only way someone can change their address to opt out of the Scottish rate of income tax – which is likely to be higher than the rate for the rest of the UK – is to go online with the HMRC web site.
No emergency coding
“This presents problems because HMRC admits huge numbers of taxpayers do not have internet access and many that do need help with navigating the site and completing forms,” said Upcraft.
“And if someone did not get the letter, how are they supposed to know what they are paying and how to report their correct address?”
Upcraft also points out that HMRC has no default emergency tax code for anyone paying the Scottish rate of income tax – which means they could be left paying too much or too little tax because software does not accommodate their needs
