underpaid tax advice

beattie2000

HI, I had 3 different PAYE jobs last year that used 3 different tax offices. I have worked out that I have underpaid tax by a few grand. The revenue have not flagged this up and given me the normall tax code for this year.
I am not subject to self assesment, so if I say nothing will I get away with not repaying it!?

trevormax

I'm not saying you should ignore this but it is possible however very unlikely HMRC will miss it and they have 6 years in which to spot it (although I think this is going down to 4 years soon). Its always better to do something about it rather than burying your head in the sand and hoping nothig will happen.

When you say you had 3 different jobs, what do you mean? did you have 3 jobs at the same time or one after the other? Where you a higher rate tax payer? If you are comfortable with it, you could say on here what your gross pay and tax paid was for last year and we can double check to be sure you have underpaid tax.

trevormax

Lyndsay101 wrote: »

This is money laundering and a big and illegal risk. You have an obligation to inform HMRC.

Perhaps HMRC will never find out and you'll get away with it - I'm pretty sure this must happen to thousands of people every year. If they do find out, however, you'll be charged interest and penalties on the amount outstanding which can double the tax payable. HMRC can raise an assessment into your tax for last year any time within the next 6 years (increasing to 20 if they suspect fraud). I'm not sure whether they do this often/the likelihood on small amounts of tax.. you never know though.. give it a few years and perhaps all the offices will be co-ordinated.

Its obviously a decision you have to make youself ... good luck!

The interest and penalties apply to people on SA. I worked PAYE for about a year in HMRC and we never once asked for interest when someone had underpaid tax on PAYE income.

fengirl_2

It is not illegal to underpay tax, nor is it money laundering.
I am curious to know how you came to underpay tax whilst on PAYE, but, as others have said, HMRC have 6 years to catch up with you. They would probably include the underpayment in your PAYE code for a future year and you certainly wouldnt be subject to interest and penalties. Its always better to owe HMRC rather then them owe you, as it means you are in control.

Dave101t

you will be found out. they found out i had underpaid from 3 years ago and altered my tax code automatically to adjust. of course you can plead ignorance but if a balance is due, it will accrue interest from when you are informed of it....

beattie2000

I'm pretty sure its not money laundering or fraud!!!
I had 2 contract roles and the job I am in now, all at different periods in the year. Would it have confused the matter that I only worked for 6 months?
I'm not sure how they managed to mess it up as I handed P45's into each employer.......
I'm going to take my chances....if they catch up with me in a couple of years time I am sure the 2 grand I owe them will only be worth a couple of quid then after the hyper inflation we are heading into!

trevormax

beattie2000 wrote: »

I'm pretty sure its not money laundering or fraud!!!
I had 2 contract roles and the job I am in now, all at different periods in the year. Would it have confused the matter that I only worked for 6 months?
I'm not sure how they managed to mess it up as I handed P45's into each employer.......
I'm going to take my chances....if they catch up with me in a couple of years time I am sure the 2 grand I owe them will only be worth a couple of quid then after the hyper inflation we are heading into!

So as the jobs were not at the same time, are you a higher rate tax payer? (did you earn more than £40,835 before tax and NI were taken off) were you on a reduced code last year or the basic 603L code? Were you on a M1/W1 code (code would be something like 603L M1/W1)? If you only worked for 6 months of the year it seems even less likely you have underpaid taxes unless all three employers screwed up massively. Do you have a P60 yet for last year?

HMRC wont charge interest for the underpayment.

beattie2000

I started off as a higher rate tax payer in the first role but wasn't after that. I will be a higher rate tax payer this year.
I was on tax code 603L for all the roles. they have put me on code 647L for this year

I havn't had my p60 for last year yet but worked it out from payslips.

Last year I earned 22355 but only paid 3100 in tax. I worked out that I should have paid 5125

Mary_Hartnell

As the old saying goes, you evade tax when you can afford to pay it and they catch up with you when you cannot afford to pay it.

trevormax

beattie2000 wrote: »

I started off as a higher rate tax payer in the first role but wasn't after that. I will be a higher rate tax payer this year.
I was on tax code 603L for all the roles. they have put me on code 647L for this year

I havn't had my p60 for last year yet but worked it out from payslips.

Last year I earned 22355 but only paid 3100 in tax. I worked out that I should have paid 5125

If you earned £22,355 on a 603L code then your tax due would be as follows:

£22,355 minus tax free amount 6035 = £16,320
£16,320 @ BR 20% = £3,264

Going by this you have only underpaid by £164

If you are going to be HR all year in 2010/2011 they will reduce your tax code in that year by 410.

beattie2000

cheers trevormax!

I think I got mixed up and included national insurance as well......

Panic over!!