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

fred_quimby

Not a gripe about paying tax as I believe that if you earn it you pay it. However (isn't there always a 'however'??) I phoned up HMRC last year (about May/June time) and informed them that I thought I was paying too little tax. They spent about 45 minutes going through my 2 pensions and my current salary. They then issued me with a new tax code for the rest of the year to ensure that all my tax was paid and then, yes you have guessed it, I have been sent an under payment bill. I have tried to phone, unsuccessfully, many times but they are always busy. To say that this is incompetence is an understatement. Does this mean that my current tax code is wrong as well and that I will get another bill next year? Anyone know of another number I can ring beside 0845 3000 627?

moneyfoolish

dori2o wrote: »

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.

I'm in a similar situation in that since 2001, I've had employment and a company pension from a previous job. I checked to see that I was paying tax on both but never did any more than that. I have a normal tax code from my employment but all of my income from my pension has always been taxed via a BR code. I would guess that when I first started working my combined salary and pension was below the 40% level but that as my salary increased then at some stage it went over and that no adjustment was made because of this. I'm now almost 66 and remember that sometime around my 65th birthday I got a form from the tax office asking me for information because they wanted to know if I was going to take the state pension (which I have deferred). The form asked me details about my employment and also about any other income so I obviously put down my pension and when I took it although I assumed they knew this already as they were taking tax off it. I can't be sure exactly when this form was sent as I merely completed it and returned it without taking a copy! I'm pretty sure that I will have to pay back the tax they have asked for but wonder how many years back they can go? As a few people have said earlier when told they should have known. In many cases we didn't. For my part, in 10 years since I moved from self-assessment to PAYE, I have never done anything more than check to see if tax was being taken and that my NI number was correct on both payslips. After 7 years of self-assessment, one of the boons of returning as a permie was not to have to worry about tax! Although, why I should have expected any organisation in this country to be able to do it's work correctly, God only knows!!!

Diana80_2

I have received one of the dreaded notices that I have underpaid tax during the tax years 2008-2009 and 2009-2010.

The total is £1578. It also says that should I believe that my employer made a mistake, to write to them as the employer may be liable instead. I have done, as I work for a bank and that is my sole employer. They deal with all our tax code and income stuff.

My question is: has anyone had any success yet with this approach? (I.e. HM Revenue & Customas recovering the underpaid tax from the employer?)

Thanks,

Mikeyorks

Diana80 wrote: »

My question is: has anyone had any success yet with this approach? ,

Not if they approach it with absolutely no evidence .... as you have done. You need (look at the P800s) to rationalise where the error is first before shooting in the dark.

Do you have a subsidised Mortgage - or other benefits in kind?

Diana80_2

Mikeyorks wrote: »

Not if they approach it with absolutely no evidence .... as you have done. You need (look at the P800s) to rationalise where the error is first before shooting in the dark.

Do you have a subsidised Mortgage - or other benefits in kind?

Yes, part of my mortgage is on a staff rate... but that's all.

sorry, looking at that form it's like reading chinese! I can't spot where the error happened. I don't know where to start! Sorry to sound so naive, but i am not a tax specialist...

Mikeyorks

Diana80 wrote: »

Yes, part of my mortgage is on a staff rate... but that's all.

That may be enough. As HMRC operate to a high (4.75%) threshold for such beneficial loans. You should have a P11D from the employer setting out the net benefit?

If you post the details from the P800s someone will attempt to quantify where the problem lies? Your basic personal allowance should be £6475 ........... if it's less than that on the P800s then that will be where the problem stems from?

Diana80_2

Mikeyorks wrote: »

That may be enough. As HMRC operate to a high (4.75%) threshold for such beneficial loans. You should have a P11D from the employer setting out the net benefit?

If you post the details from the P800s someone will attempt to quantify where the problem lies? Your basic personal allowance should be £6475 ........... if it's less than that on the P800s then that will be where the problem stems from?

Thank you! Yes, I do have a P11D from work, and it states as my only benefit the part of my mortgage which is on staff rate, which is about a third of the total mortgage amount.

OK, I have 2 P800s, one for 2008-2009 and the other for 2009-2010. Now that I look at it, I realise I didn't understand the terminology. It says: "The amount of beneficial loan included in your PAYE code was lower than the amount taxable" whatever that means. I guess by beneficial loans they mean the mortgage rate concession...

Yes, the personal allowance is quoted as you say, at £6475.

So sounds as my employer made a mistake then, doesn't it?

Mikeyorks

Diana80 wrote: »

So sounds as my employer made a mistake then, doesn't it?

Not necessarily. Does the P11D figure agree with the figure (Note '4' in the right margin?) on the P800?

Diana80_2

Mikeyorks wrote: »

Not necessarily. Does the P11D figure agree with the figure (Note '4' in the right margin?) on the P800?

I have just checked. On the 2009-10 P800 it says £Employers Loan Benefit £3978 which is only £1 more than it says on my P11D for same year. For 2008-09 the amounts quoted match.

Mikeyorks

Diana80 wrote: »

I have just checked. On the 2009-10 P800 it says £Employers Loan Benefit £3978 which is only £1 more than it says on my P11D for same year. For 2008-09 the amounts quoted match.

Right. The £3978 at 20% gives you an underpayment of £795.60 if that is the sole reason? Does that more or less agree with the underpayment for 09-10?

And the remaining underpayment (circa £782) should stem from a benefit of around £3910.

If all of that is right? When did the 'loan benefit' originate? Do you have a P11D also for 07-08 .... and possibly earlier? Also .... picking up on something said earlier, does your 09-10 P60 (or last payslip) reflect code 647L?