Employer switch & car benefit messing up income tax! Confused!

nicki_2

My parnter formally worked for a company where he was given a company car half-way through his employment with them BUT they messed up the paperwork and now we've been sent a bill for £1006 AND Car Benefit is listed on his PAYE Tax Code Notice even though he has changed employer :eek: I've looked over all the tax papers we have for his employment with the former employer and my head is spinning! (I usually leave it to him to look at but this bill has made me have a good sort out with his permission!) Basic facts are :

Former employer : Actual contract started 17th Feb 2003 and was allowed access to the company car from 31st December 2003 (according to their records) he then left the company 27th August 2004 (the date on his P45)

From what I can work out, using the worksheets from the P11D form, he should have had car benefits for 296 days which came to £1,211 for 2003/04 year BUT on his tax calculation (issued on 21st Oct 2005) it says Car Benefit is £4571. Following the working out on the form but with the correct figures, gives me a tax underpayment of £267.30 NOT £1006.50 which they make it out to be.

Following on from that (and using the notes supplied with forms about understanding your tax code) I've tried to work out what his tax calculation should be for the financial year 2004-05. Without taking into account the previous years underpayment I get a figure of £9.46 OVER payment. However if I calculate in the underpayment from 2003/04 I get an UNDERPAYMENT of £55.84 for 2004/05.

I honestly don't know what to do next. No disrespect to my parnter, but I'm the more financially minded of the two of us and it would be soooo much easier if I could ring up and sort this mess out for him as I could tell by the look on his face when I tried to explain it to him, that he just doesn't get it!

So my question is : Whats the best way of sorting this mess out?

YorkshireBoy

nicki wrote:

So my question is : Whats the best way of sorting this mess out?

I'm no tax expert, but when my wife had some queries on her coding, she rang (the number on the notice of coding) and authorised me to act on her behalf.

I managed to sort out the problem over the phone, and they put the calculations in writing for my wife as well.

sarahlouise210

Ok .. first of all has the car benefit been worked out from him filling in a tax return or has HMRC sent him a PAYE calculation without one? If he has completed a return ..he could have entered the wrong car benefit details. If they have raised the calculation they will have used the P11d(statement of benefits) from his ex employer and his ex employer could have submitted incorrect P11D details. If that is the case then he needs to ask his ex employer for a revised P11d and ask HMRC to revise their calculation. What are you basing your calcs on ?? for 2003-4 basing the deduction on CO2 missions was well under way - is the car deisel..extra 3%! Did he make any contributions towards the car direct to his employer ?? If so these can be deducted from the charge but HMRC may not have been aware of the payments. Really you need to post figures and details from P11d to enable us to check ..also ..was his tax code correct on other matters during the year ??? Part of the underpaymenbt could relate to the car and part to another coding problem..however they may have only mentioned the car on their explanation.

nicki_2

sarahlouise210 wrote:

has the car benefit been worked out from him filling in a tax return or has HMRC sent him a PAYE calculation without one?

He hasn't been sent a tax return ever. He's always just received a PAYE calculation from them without one but last year alone he had 3 PAYE calculations sent to him!

sarahlouise210 wrote:

If they have raised the calculation they will have used the P11d(statement of benefits) from his ex employer and his ex employer could have submitted incorrect P11D details. If that is the case then he needs to ask his ex employer for a revised P11d and ask HMRC to revise their calculation.

The P11d that his ex-employer submitted and that the IR must have used was correct from what I can tell from the worksheets which we have. For the tax year 2003/04 the IR say he should have recieved a full years worth of car benefit (£4571) when in fact due to the car only being available to him for 269 days of the 366, according to the worksheets for the P11d, he should have only received £1211 in car benefit.

sarahlouise210 wrote:

What are you basing your calcs on ?? for 2003-4 basing the deduction on CO2 missions was well under way - is the car deisel..extra 3%!

I've based our calculations on the P11d worksheets from the ex-employer where it lists the CO2 emissons. Fortunately the car was petrol but it was an Audi A4 1.8, with a list price of £19046. I used the calculator on the IR website and the information from the P11d worksheets.

sarahlouise210 wrote:

Did he make any contributions towards the car direct to his employer ?? If so these can be deducted from the charge but HMRC may not have been aware of the payments.

He paid for private petrol only. Everything else was paid for by his ex-company using a company petrol card.

sarahlouise210 wrote:

Really you need to post figures and details from P11d to enable us to check

What sort of details?

sarahlouise210 wrote:

.was his tax code correct on other matters during the year ? Part of the underpaymenbt could relate to the car and part to another coding problem..however they may have only mentioned the car on their explanation.

He is a basic rate tax payer. During the financial year in question (2004/05) he changed jobs and his tax code, on his wages from his previous employer, was always L until his final one in the August which was K19 M1. We knew that the company had messed up the paperwork regarding the car, by this point, so we were expecting a coding change and for it to effect his tax at his next employment. His current employment then goes 3@ 1-19k (sept, Oct, Nov) then it switches back to L (including the one he got last week).

I hope this helps explain a few things. I'm hoping to get this resolved this week, at least at our end!