Thousands of company car drivers are paying the wrong amount of taxation due to errors made by HM Revenue & Customs.

As a result, Fleet News is urging fleets to sign its petition demanding the Government’s review the way HMRC processes the information related to company car benefit-in-kind and fuel benefits to improve accuracy when issuing tax codes.

A Fleet News poll reveals that 80% of respondents have drivers who have received an incorrect tax code from HMRC related to their company car tax. HMRC, itself, admits that, of the 18 million tax codes issued in recent weeks for 2012/13, as many as 2% could be incorrect – equivalent to 360,000 records.

Not all are related specifically to errors on company car taxation, but a growing number of fleets have told Fleet News that their drivers are among those affected.

Wrong tax codes are likely to result in either a tax under or overpayment until the error is corrected.
One fleet manager said: “The wrong P11D figure is constantly being used as well as incorrect CO2 calculations. Despite having a fuelcard and telling HMRC, this is never carried over to the following year.”

Another complained about cars being missed off the coding even though HMRC had all the details on file from the P46 (Car) reports. This resulted in large underpayments which HMRC then sought to reclaim.

In a further case, one company car driver’s tax liability “almost doubled”.

The issue is not new: in the run up to the 2010/2011 tax year, new computer systems resulted in 15 million incorrect codes being issued, notably around pensions and second jobs, but also in relation to company cars.

However, the volume of complaints received by Fleet News suggested the situation affecting company car drivers is worsening.

Debbie Floyde, group fleet manager at Bauer Media and secretary of the East Region of fleet decision-makers’ body ACFO, said: “In the last month I’ve received four or five incorrect tax code queries from employees – and they are the diligent employees who have checked and brought the issue to my attention. It is a hotch-potch. We need to get the issue resolved.”

Tax code errors typically happen when a change in an employee’s circumstances has occurred during the tax year. Although updated information may have been sent by either the employer or employee to HMRC, it has either not been acted upon or acted upon incorrectly.

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