P800 - state pension

kiddac

I am wrting on behalf of my mother who has received a P800 form for tax underpaid for the tax year 2008-09

I have had a look around this forum and also websites like taxvol & litrg and still unsure of the answers. So any help would be much appreciated.

I have had a look at all her figures and they seem to be right and make sense.

PAYE income £9114 Tax Paid £614.80
State pension/State Benefits £4716 Tax Paid 0.00
Total Income £13831. Total Tax Paid £614.80

Personal Allowance £9030

Therefore £4800 taxed at 20%

Tax Codes
April 07 - Mar 08 522L
April 08 - Aug 09 543L
Sept 08 - Mar 09 603L
April 09 - Mar 09 647L

She is now fully retired.

Now the obvious problem here is that no tax has been paid on her state pension meaning £345.20 is owed for the total income.

My question is, who's fault is it this hasn't been taxed, hers, her works PAYE department or HMRC. Any advice on what course of action I should take next is much appreciated. I already have a few template letters. But it is unclear whether she has a valid claim to have this underpaid tax removed.

Mikeyorks

kiddac wrote: »

My question is, who's fault is it this hasn't been taxed, hers, her works PAYE department or HMRC. .

Impossible to say. The more usual, but not inevitable, course of events is that HMRC are advised by DWP when a State Pension starts to be paid. And HMRC send a pension enquiry form (P161) and then make any necessary adjustment to the Code when that's returned. Or HMRC issue an enquiry just prior to pension age kicking in - if they have the dob.

Doesn't appear to be the case here as your mother would have been £940 pounds underpaid for 08-09 otherwise. As her code number doesn't reflect the age allowance - whereas the P800 does. And that's redeemed part of the underpayment.

It would help to know when the pension started to be paid? As 08-09 is the earliest year that P800s are being issued for .... so there could be earlier 'underpayments'? Also - as there is no P800 apparently for 09-10 .......... was the pension issue resolved recently? Or has it naturally resolved from a lower income? As something has occured to persuade HMRC that the age related allowance was due 08-09 (and subsequently) as opposed to the basic allowance (£6035) given initially in her Code number.

The HMRC view on people approaching State Pension age is here :-

http://www.hmrc.gov.uk/pensioners/approaching-notify.htm

Murdina

http://www.hmrc.gov.uk/manuals/pommanual/paye76030.htm

Have a look at this page - it is a bit obscure but it tells you that DWP automatically notify HMRC of pension awards and upgrades.

Thus HMRC had the information all along that your mother was getting state pension and did not act on it. Good ammunition for arguing ESCA19 certainly for 2008/9.

Pennywise

Murdina wrote: »

Thus HMRC had the information all along that your mother was getting state pension and did not act on it. Good ammunition for arguing ESCA19 certainly for 2008/9.

Even more amunition if she was in receipt of state pension for 2007/8 and even better for earlier years as the more years HMRC have ignored the information they received (P60s from employer and pension details from other govt department), the more likely the ESC will apply.

Mikeyorks

Murdina wrote: »

Thus HMRC had the information all along that your mother was getting state pension and did not act on it. Good ammunition for arguing ESCA19 certainly for 2008/9.

But that isn't what it says (or does). The reference you've provided is for the annual uprating service. Whereby people known to have an existing State Pension have the value for the coming year uprated in order the new value is applied in the Annual Coding run.

It's true that DWP normally advise HMRC of new pensioners .... but it's not guaranteed.

http://www.hmrc.gov.uk/manuals/pommanual/PAYE76070.htm

kiddac

Thank you for your replies, just re-reading my posts I have obviously got all confused with the dates for tax codes I posted, they should read

Tax Codes
April 07 - Mar 08 522L
April 08 - Aug 08 543L
Sept 08 - Mar 09 603L
April 09 - Mar 10 647L

But I think people assumed this anyway.

My mother was 60 in June 2003 and received state pension from 60.

She worked till Mar 2010.

She has a National Insurance Exempt certificate, and looking at her Pay slips hasn't been paying National Insurance. So from that I presume they are aware of her age.

I can't find a P60 or P45 from her for 2009-2010 but looking at her last payslip Total Taxable to date was £9634 so not too disimilar to 2008-2009

I am still not clear from all your answers, but hopefully reading between the lines, hopefully arguing ESCA19 might win the case.

Gas_Powered_Toothbrush

Bear in mind that because the state pension can be deferred, HMRC will not automatically assume your mother was getting it merely because she was 60.

The DWP are supposed to inform HMRC when it starts, yes, but if they haven't, the onus was then on your mother to notify them she was getting it.

Basically, unless you can prove the DWP had notified them, I think an ESC A19 claim will fail.

Mikeyorks

kiddac wrote: »

I am still not clear from all your answers, but hopefully reading between the lines, hopefully arguing ESCA19 might win the case.

I very much doubt it ...... as it looks as though HMRC have been oblivious of the State Pension until some time (below) during 09-10. And - if similar levels of earned income - she has been escaping the tax on the State Pension since 2003?

I can't find a P60 or P45 from her for 2009-2010 but looking at her last payslip Total Taxable to date was £9634 so not too disimilar to 2008-2009

........ in which case one assumes a corrected Code was in operation - otherwise when you add the State Pension onto that - there would be a further underpayment.

Pennywise

I'd certainly make an ESC claim - it's only an hour or so of your time, a piece of paper and a stamp. From the successful claims so far, it seems you're just as likely to succeed. Don't be put off by people saying it's your/her fault - it all comes down to whether there was a "reasonable" belief that tax affairs were in order - if the circumstances are similar for many years, and considering it was a govt dept paying the state pension, that I'd contend it was "reasonable" to assume HMRC were doing their job properly. Another point in your favour is that HMRC must have received information from the DWP to be able to raise the demand and correct your tax return for the current year - that would suggest that there has been an exchange of information between DWP and HMRC - it would be "reasonable" to assume that such exchanges happened every year - why would DWP suddenly tell HMRC about your pension now if they hadn't in the past? At the end of the day, it seems it's another case where DWP HAS been telling HMRC over several years, but HMRC havn't acted upon information they've been given. If that's really what has happened, then it's almost exactly what ESC A19 is there for!

Mikeyorks

Pennywise wrote: »

Another point in your favour is that HMRC must have received information from the DWP to be able to raise the demand and correct your tax return for the current year - that would suggest that there has been an exchange of information between DWP and HMRC - it would be "reasonable" to assume that such exchanges happened every year - why would DWP suddenly tell HMRC about your pension now if they hadn't in the past? At the end of the day, it seems it's another case where DWP HAS been telling HMRC over several years, but HMRC havn't acted upon information they've been given.

There are assumptions and there are gross assumptions ....... that's definitely one of the latter. As the taxpayer appears to have had in excess of £20k untaxed State Pension between 2003 and early 2008 (potential loss to the Exchequer in excess of £4000) ....... I would be thinking twice before opening the box lid.

Whilst HMRC haven't indicated they will go back prior 08-09 in underpayment cases ....... nor have they indicated to the contrary.

System

Gas_Powered_Toothbrush wrote: »

Bear in mind that because the state pension can be deferred, HMRC will not automatically assume your mother was getting it merely because she was 60.

The DWP are supposed to inform HMRC when it starts, yes, but if they haven't, the onus was then on your mother to notify them she was getting it.

That is why HMRC issue the P161 when a person approaches state pension age, so that the taxpayer can clarify if they are continuing in employment, starting to receive any private pensions and, most importantly, either starting to receive the state pension or choosing to defer it.
If one was sent to your mother and she failed to return it then that could have contributed to her current underpayment and it looks as if HMRC only caught on to it in 08/09.