Split tax code problems

ppr9

So this is a long one but having talked to HMRC on 3 separate occasions and got 3 different answers it's slowly driving us crazy. My girlfriend was a student up until june and has had a part time job in a shop for much of her time at university.

The earnings from this job have always been such to fall below the personal allowance and never been taxed in the past. Towards the end of 2009 she stopped working during term time to allow her to study more for her final year. She however remained on the stores books in order to do some work over this summer. Her earnings up until december 2009 were around £4000 and she earnt nothing at all from january-april 2010.

In January she had to do some travel as part of her university course and the university paid her expenses (around £90). In the past they have always paid these expenses cash, but for some reason best known to themselves they decided to do it through payroll this time.

HMRC saw this, and in February decided it was a second job and split her tax code. They somehow decided that £90 expenses amounted to £1800 a year, they then got things backwards and assigned 180L to the shop job and 467L to the university 'job'.

The shop processed the new tax code in march and decided she should have been taxed all year. They worked out all the tax she would have paid and deducted it from her march pay packet - which was 0 as she had not worked since december. Her pay slip for march therefore says -£400 or so. She unfortunately did not notice/ignored this.

HMRC were subsequently informed she did not work for the uni and assigned a correct tax code for 2010-2011 which was picked up by the store.

Fast forward to this summer where she gets a few shifts at the store to keep things going until she gets a proper job. The store are claiming she still owes this £400 'tax' and are deducting it from her pay - essentially leaving her unpaid for the work she does. The store is claiming it is tax, the mistake is not their problem and she has to wait for a tax refund. The pay slip however just lists it as brought forward not as tax.

The things that puzzle us are:

Were the store right to deduct tax in a month where she wasn't paid? - we thought they could only take money you'd earned that month and any shortfall at year end was for HMRC to bill direct.

Certainly the store are out of pocket and could ask her to pay this money back - but is it tax in any legal sense? My understanding is that if it isn't tax they have no legal right to deduct without her say so. She'd quite happily pay some percentage of her pay but can't afford 100%. Surely it can't be tax if she's only earnt a couple of hundred this year and has a 647L code?

We've had varying answers from HMRC - one person told us the store broke all sorts of rules and couldn't do the things they did, another basically said everything they did was normal, the third sat on the fence. Meanwhile 6 weeks later she's still waiting for a refund that was meant to take up to 4.

John_Pierpoint

So it will all come out right in the end?
Unfortunately the tax system is not designed for those on a hand to mouth existence; that is why it gets in such a mess with tax credits.