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HMRC internal manual

Self Assessment Claims Manual

HM Revenue & Customs
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How to Deal with Tax Adjustments that are not Claims?: What if the Customer Disagrees with your Conclusions - PAYE Code

Usually these cases relate to the customer’s PAYE position at the time the request for the adjustment is made. Where you have asked questions about an exemption, deduction, or other tax adjustment, you may conclude that the customer’s figures are wrong. The customer may not agree with your conclusion.

If you are still within the relevant year and effect could be given to the deduction through a coding adjustment, the easiest way to deal with a disagreement is through the normal PAYE coding procedures. Guidance is given in the PAYE on-line Manual. See the section on “Coding - General Principles” for information about objections and appeals against notices of coding.

If the customer has a current notice of coding and you are not prepared to issue a new code to reflect the adjustment requested, then he or she can formally object to the current code, and then appeal against your refusal to amend it. If there is no code in existence you should issue a code reflecting your views. The taxpayer can then object to, and appeal against, the code.

Any adjustment given effect to through coding can be looked at again after the year-end. If you decide to reject a request to amend a code number for the current tax year (and it is near the end of the tax year or the point is essentially a technical one), it is best to explain to the taxpayer that there could be duplication of work if we have both a coding appeal and then an appeal arising out of a self assessment.

If the taxpayer is content, the point can be dealt by leaving the adjustment out of the code number. The customer claims the adjustment in the self-assessment for the year and HMRC opens an enquiry. Where there is still disagreement, see ARTG2100 for guidance on the review and tribunal process. Where the customer is not usually issued with a self-assessment return it will be necessary to issue one for the year in question.