HMRC Put me on wrong tax code - shorfall to pay

marcusr_2

I have a rather delicate issue.

I work for a larege company and have done since Sept 2005. I was on the correct tax code when I joined (403L). My company sent off my P45 to HMRC in December 2005 and were given back tax code BR1 (basic rate tax code) and as a result.

I have moved overseas with work I had to complete a tax return via PWC and it transpires I have paid too little tax for the tax year April 2007-2008. This adds up to nearly GBP 4,000

Basically I have been on the wrong tax code from Dec 2005 to when I left London in March this year. I have not been advised of this change of tax code as I am PAYE and I would not audit.

My employer are claiming no liability for the shortfall as they were advised by HMRC to change my code.

As you can imagine I am rather unhappy that between my employer and the HMRC they have cocked up my code and I am left with this liability.

Does the HMRC have any liability for changing my tax code to the incorrect one??

dori2o

Unfortunately the responsibility to ensure that the right amount of tax is paid based on the income received falls on the individual. It is very unlikely HMRC will accept any liability in this case.

System

This is puzzling, if you were on a BR tax code and ended up with a underpayment of tax then you must have been earning enough to end up in the 40% tax bracket. You say you were put on the BR code in 2005 but don't mention any underpayments for 05/06 and 06/07. You only mention 2007/2008.

In 2005 did you have 2 jobs? this might explain the allocation of the BR code to that employment. If not did you not query the BR code when the PAYE coding notice was sent to you?

What happened in 2007/2008?

marcusr_2

I moved jobs in 2005 from one company to another. At the old company I was on the right code 403L, but it transpires when I moved jobs and my new employer sent off my P45 the HMRC sent them this new tax code of BR1 to put me on. I have no recollection of any letter being sent to me telling me of any update to my tax code. How can I even prove HMRC sent this out? Regarding tax coding, I was not nor am I still aware that it is my responsibility to check these when you get your P60. My net tax has alwys been about 30% ish which to me makes sence as I earn slightly over the UK average so I have never had cause to query. If I was being deducted say 20% when I was earning 45K a year then alarm bells would ring. As I have always been PAYE this is the first time I have ever had any tax issues. In my opinion the HMRC issued an incorrect code in 2005 and have not picked up on it for 3 years. As I am PAYE surely it is not my sole responsibility to audit what HMRC do.

Pablo_the_brave

Would have to agree with dori2o - Its not down to your employer or HMRC - Its your responsibility to ensure that the right amount of tax is paid. Does not matter what has happened regards tax code. You've earned the money you've got to pay the tax!

mtem74

You can always ask HMRC to confirm whether or not the BR coding was issued to you.
Also I would find it strange that you are out onto a BR1 from a P45. If these are the only 2 employments you had during the year then simply put when the taxman received your P45 he would have known you'd left one job for another. Have you retained any payslips from these jobs? Would be interesting to see what was on them. If you changed to BR1 then they should reflect the fact. Which is worse for you as then they would clearly show the code and you never querried it.

System

If HMRC had issued the code BR1 and had your correct address then you would have received a PAYE coding notice. If you didn't receive one I would guess HMRC never issued it.

However if you make an appointment with your local HMRC enquiry centre they will check your PAYE record and tell you exactly what codes they issued, when and to whom.

CLAPTON

what was your gross income in each of these years?

chriiiiiiiis

Pam17 wrote: »

If HMRC had issued the code BR1 and had your correct address then you would have received a PAYE coding notice. If you didn't receive one I would guess HMRC never issued it.

This wouldn't matter anyway. If the calculations are correct, then there is an underpayment of tax and it has to be paid, regardless of who is to blame.

If we both earned the same amount of money but you didn't pay enough tax because the correct tax code was not operated, I wouldn't be happy.

PAYE is a provisional system - If your tax isn't correct in-year, it's sorted at the end of the year.

System

chriiiiiiiis wrote: »

This wouldn't matter anyway. If the calculations are correct, then there is an underpayment of tax and it has to be paid, regardless of who is to blame.

If we both earned the same amount of money but you didn't pay enough tax because the correct tax code was not operated, I wouldn't be happy.

PAYE is a provisional system - If your tax isn't correct in-year, it's sorted at the end of the year.

That's perfectly true I was just trying to point out to the OP that there are not just 2 departments/people involved in ensuring that tax codes are correct. There are 3 and the 3rd one is the taxpayer. They should ensure they keep HMRC up to date with all their changes of circumstances and not expect their employers to do it for them.

Regardless of whether HMRC issued a wrong code or the employer operated it incorrectly the OP received payslips for 3 years which had a BR code on it. Surely they would have recognised that BR was not of the same format as previous codes and queried it with HMRC.

jimmo

This sounds very similar to a previous thread
http://forums.moneysavingexpert.com/showthread.html?t=1088097