HMRC's new Real-Time Information (RTI) system that organisations are obliged to use to submit their staff Pay-As-You-Earn (PAYE) tax - introduced in April - is struggling, with companies claiming that key information is being omitted or lost, meaning that people may not be paying the required amount of tax.
RTI is intended to make it easier for HMRC to keep track of working people, receive payments sooner and to ensure that payments are accurate. It requires employers to inform HMRC every time staff are paid, whether daily, weekly or monthly. Before RTI, employers were only obliged to update wage information with HMRC annually.
"In theory, it will eliminate annual reconciliations and end-of-year forms such as P14s and P35s. All schemes/employers with fewer than 5,000 employees will start to submit RTI in April 2013; those with 5,000 employees or more will start to submit RTI on dates agreed with HMRC between June and September 2013," says chartered accountant Ken Frost, who authors a blog dedicated to the "monumental shambles that is HMRC".
However, users report that the new system has classified tens of thousands of workers as no longer in employment, disregarding their taxable benefits, including child care vouchers and private-health insurance, meaning that they have been "under taxed".
The system has been phased in from April, but according to reports, RTI has struggled to accommodate organisations that run two or more payroll systems - one for paying wages weekly and another for monthly-waged staff, for example.
As a result, as many as 40,000 taxpayers have paid the wrong amount of income tax - a problem confirmed by an HMRC spokesman who said that it is aware of a problem "affecting a very small number of employers".
One complainant commenting on the Telegraph.co.uk website said: "There were 140,000 small businesses employing fewer than nine people that were not able to send details on RTI. There has been no communication from them [HMRC] to advise on this, nor have they sought to use the media."
Others suggested that while their experience was relatively smooth it was not without hitches: "Bit of a nightmare to set it up, website designed by an idiot but - surprise, surprise - it seems to work."