MSE News: Tax chaos Q&A: How to fight HMRC demands

dori2o

kickwhamstunner wrote: »

The rejection under ESC A19 is correct. For it to apply, HMRC must have failed to act on information within 12 months of the end of the tax year in which it was received. The P14 details for 08-09 would have been received during the 09-10 year, so HMRC has 12 months from the end of the 09-10 year to act on it. In short, since they've acted before 5th April 2011, the claim will fail.

The reasonable belief test is only considered if the time test is satisfied.

But it would depend on whether HMRC have in fact acted correct prior to that. i.e.did they have a record for both sources following the submission of a P46/P45. Were there 2 records, one under a NINO and one under a TEMP ref number both records having issued 603L for the year.

If the answer is that HMRC have issued everything correctly,then yes ESC does not apply. But all avenues must be exhausted first.

suso

angmac142 wrote: »

Thanks for response Dori2o. Circumstances were main employment salary plus HM Forces pension with same tax code. It took HMRC until now to work out that the combination of the 2 had put me over the threshold at the time and that some of my earnings should have been taxed at the higher rate. Is this suffice info?

Its quite likely hmrc are correct in what they have done,

you say that you combined earnings took you over the 40% threshold for income tax, and this is where the shortfall is from. HMRC don't know in advance what your earnings are, and can only react once the information is received by them.

So the critical question here is, did you inform HMRC in advance that you were going to be a higher rate tax payer, if not then they are reacting within their time limits. If they had known in advance of your income they would hve issued a code with a restriction to collect the higher rate tax at one of the sources.

dori2o

suso wrote: »

Its quite likely hmrc are correct in what they have done,

you say that you combined earnings took you over the 40% threshold for income tax, and this is where the shortfall is from. HMRC don't know in advance what your earnings are, and can only react once the information is received by them.

So the critical question here is, did you inform HMRC in advance that you were going to be a higher rate tax payer, if not then they are reacting within their time limits. If they had known in advance of your income they would hve issued a code with a restriction to collect the higher rate tax at one of the sources.

He did say though that the pension AND employment were operating the same tax code, so it needs to be established if HMRC had 2 records for this person, and if they issued a standard code from each record.

If however the codes issued were correct, then yes, unfortunately you have failed the time test and ESC does not apply.

faineant

I would appreciate opinions from some of the experts on here as I have been asked to help an elder relative.

An underpayment has been notified for both of the last two years and on looking through the paperwork this is due to one of two occupational pensions not being taxed correctly.

Now the pension in question is a widow's pension from the HMRC itself. So a serious question here, is it reasonable to assume that the HMRC knew about this or are there some quirks and loopholes that separate that part of the HMRC who pay the pension and the one that calculated the underpayment?

Gertie_Walker

I understand HMRC pensions are paid by Capita. In any case the pension paying part of HMRC would be as separate from the oeprational part as would HR. Did you notify HMRC that you thought the code numbers being operated against the pensions were wrong?

faineant

Gertie_Walker wrote: »

I understand HMRC pensions are paid by Capita. In any case the pension paying part of HMRC would be as separate from the oeprational part as would HR. Did you notify HMRC that you thought the code numbers being operated against the pensions were wrong?

All of the recent coding notices have taken account of the state pension and carried the comment that HMRC would notify the other occupational pension of the new code. This has been applied correctly. The HMRC pension has deducted tax only on the basis of the standard personal allowance which is where the underpayment has arisen. I can understand why they would notify the other provider but it would have looked rather silly if it had also stated that they would notify HMRC as well! So that being omitted does not raise any eyebrows and it seems reasonable that they knew about the HMRC pension as it has been paid for quite a few years before the years now notified as underpayments.

cjt105

Hi,

Got home to an unwelcome letter on the doormat, stating that I had underpaid by £1160.60 in 2008/2009. Having looked back through my finances, I've worked out what happened, and I'm wondering if I can legitimately claim this is my ex-employers fault?

* Worked for employer A (basic rate tax band - just!) until November 2008
* Employer A issued P45, which was given to employer B on my first day.
* Worked for employer B (higher rate tax) from November 2008
* Employer A pays me for the proceeds of employee share scheme in January 2009, and deducts tax at basic rate. This is the cause of the underpayment.

Had I continued working at employer A, and received the share sale profit, I would have been pushed into the higher rate tax band, so it is conceivable that they should have known, and taxed it at higher rate.

Is there any point in putting my case to the revenue? Also, if I do, and am successful, can employer A seek to reclaim the tax back from me if HMRC force them to pay up?

Many thanks!



cjt105

chrismac1

I think you are backing a loser here, I'm afraid. It's clear from your post that you knew the tax position when you get the shares. Employer A had no way of knowing about job B at the time of the share sale profit, so they processed the payroll correctly. Hence you had a legal obligation to inform HMRC of this source of income by 5 October 2009, so count yourself lucky you're not being fined.

chrismac1

HMRC were in a position to assess this tax on you shortly after 31 may 2009. They failed to do so, but have until 5 April 2011 - so bad luck m8!

Drone31

Hi everyone,

some advice if possible please

I received one of these letters a few days ago (a monumental surprise as I'd been utterly out of the loop with regard to the whole issue) and the amount is only a few hundred pounds, so I would like to settle it in one lump sum - is that possible, or does it HAVE to be taken via an amended tax code next year?

I get the impression, after reading some of the information on the subject, that only the larger amounts owing will be able to be paid back this way - but the letter gives the impression it's optional. (In fact, the letter states 'where your p800 Tax Calcultion says that the underpayment will be included in your tax code, the tax will be collected in equal instalments from your wages...)

Nowhere on the p800 does it indicate they intend to take the money this way, but that contradicts the information I've read on the web on the subject (smaller amounts will be paid back incrimentally, larger amounts will have the choice).

And will anybody from the HMRC be able to confirm for me, that if I pay the amount owing asap that there won't be a balls up next year and I'll end up on the amended code anyways? This entire situation just smacks of potential c*ck-ups next April for those who have chosen to settle the amount in one lump sum.

Anyhow, on a seperate note... I feel very, very hard done by on this issue - I actually started with a new employer in April / May 2008, handed over a p45, and as far as I was aware, nothing in my pay was out of the ordinary. My tax appeared to be dead on what it should have been. Some people here tend to be taking the approach of "well surely you must have know you were paying too much tax," and so on. No, actually, I had absolutely zero idea - we lowly employees talk at work, and we all seemed to be coming out with more or less the same each month. I wasn't laughing it up spending my extra dough on cigars and fast cars, laughing at the tax man. I did everything required of me by the government in terms of paying my taxes; it's incredibly frustrating.

But hey ho, I'll pay what I owe - granted it f*cks up the Christmas budget a little so it'll be time to break out the credit card, but I won't bore the goverment with that wee grumble.