HM Revenue & Customs introduced a new National Insurance & PAYE Service which will be used to issue tax coding notices. National Computer System. which has replaced the 12 regional databases that previously handled PAYE processing, has brought together the formal National Insurance Recording System (NIRS) & elements of the computerisation of PAYE database. They believe the transition to new system brought new improvement in their services. Now, it doesn’t matter how many sources of PAYE income an employee has, NPS brings together all their PAYE details on to one record & one database. NPS had three planned phases; the final one was on 6 April 2010 which adds additional automation to the process of checking the amount of tax paid by an individual for a year.

But, the transition to new system has brought to light some discrepancies in their existing records & this is resulting in a number of incorrect coding Notices being issued. HMRC explained that they are try to identify areas of potential discrepancy in the data held by our new NPS. The discrepancies may have given incorrect notices of coding & they are reviewing individual cases to put them right soon so that customers are unaffected.

They mentioned some important details on the issue like:

• If a P14 is submitted with nil pay and tax but with no date of leaving included, NPS will have created an employment record and may have issued a tax code accordingly which could be incorrect.
• In some cases another employment record has been created for the same individual with the same employer or pension provider.  This can potentially lead to the wrong personal allowances being allocated against the real employment. In the main this has arisen because the information submitted on form P14 at the end of the year does not exactly match the information held on their main record. This may differ in respect of the works number or other details.
• For various commercial reasons an employer or pension provider may well amalgamate or disaggregate PAYE scheme membership during a year. In some cases that happens without HMRC's being aware so the employer reference quoted on the P14 does not match that on their systems. This can lead to duplicate records being created for the same individual.
• They have identified some records where a previous employment that has ceased has not been closed on their system.  There are several reasons why this can occur. They will correct these cases to record the fact that the employment has ceased and make any changes that are needed for the correct code to be applied against a subsequent employment.