P800 Underpaid Tax Medical Expenses

sheepchick

Hi, first I am sorry if this issue has been raised before but I cant seem to find the answer to my question.

I recieved a letter in the post today from HRMC advising me via P800 notice that I have underpaid tax on medical expense benefit for 2009-2010. The wording is " The ammount of medical expenses benefit included in your PAYE code was lower than the ammount taxable".

Now looking at the calculations they appear to be correct.

As I do not wokr out my tax and benefits, by employer does (or did, i have now left this company i works for in this period) is it them who is liable to pay or me? In the notes that comes with the P800, section 2 states:-

"Most employers deduct PAYE tax from your pay correctly. But sometimes they do make mistakes. If you think your employer has made such mistake as not taking reasonable care to operate the correct tax code, then they may be liable for the tax instead. You will need to write to us to tell us why you think your employer has made a mistake."

So they way i look at it, i signed the forms to join the medical benefit scheme, submitted to my employer, therfore they know my benefits and should of included this in my tax code. SO i think they should pay as I have done my part?

Any advice would be great. Anybody know of a template letter I can send stating why the employer should pay the tax???

Many Thanks

Laura

Mikeyorks

What does it say on the P11D you had from the employer (the original of which goes to HMRC)? As it is that value HMRC should have coded out. And what does it say on the P2 (Coding Notice) you should subsequently have received from HMRC? As it is they who provide the Code number - not your employer.

The 'not taking reasonable care' aspect you have quoted from the HMRC leaflet. The HMRC interpretation of that will be to the effect that 'unreasonable' comprises of making a number of errors over a period of time. In other words there are systemic problems with the operation of PAYE. If they have no record of real issues with the employer ..... you won't have a chance of switching the liability to them.

sheepchick

p11d? i do not recall getting one of these? I'll check my records though. Does this get sent out when my benefits are started?

thanks :beer:

BoGoF

You get a P11d at the end of the tax year. TBH you're wasting your time, you are liable for the tax on your benefits.

Mikeyorks

sheepchick wrote: »

Does this get sent out when my benefits are started?

It has to be reported to HMRC by July after the end of the tax year.

But you should normally also have a P2 if deductions have been made from the basic (£6475) personal allowance.

jennifernil

I found that the amount included in the code number was generally based on the figure for the previous year, so you are always a year behind and therefore have underpaid.

Sarahgeordie

I too have a P800 to cover the last two years medical benefit and I have checked both years P11D and the benefit was correctly stated. I suddenly receive a huge bill (over and above the medical benefit itself!) I will be asked to pay immediately. Please advise if I have any comeback on the company for not taking the correct tax or anything else I can do. I have just been made redundant by them and it will be impossible to pay anyway

Mikeyorks

Sarahgeordie wrote: »

I too have a P800 to cover the last two years medical benefit and I have checked both years P11D and the benefit was correctly stated. I suddenly receive a huge bill (over and above the medical benefit itself!) I will be asked to pay immediately. Please advise if I have any comeback on the company for not taking the correct tax or anything else I can do. I have just been made redundant by them and it will be impossible to pay anyway

You'll need to post a lot more detail. If the underpaid tax exceeds the medical benefit ......... then it isn't solely the medical benefit giving rise to the underpayment.

RichCH

Basically they class receiving medical benefits as something that benefits you directly, therefore you are liable to pay tax on it.

A list of benefits that are taxable can be found on the HMRC website.

zultan

I have a similar situation. I have been PAYE with my employer for 10 years, they are a huge US corporation employing 20,000 people in the UK (so not amateurs at this). This is my only source of income.

I have also had an adjusted tax code to reflect the benefit in kind I get from medical cover.

In August last year my employer changed the way I received the benefit (it became a salary sacrificed flex-benefit). Since then HMRC have written to me three times notifying me of a change to my tax code.

The most recent advised me I have underpaid my PAYE by £276 in 2010 and my tax code has been changed again to recoup the amount in tax year 2011.

I phoned HMRC for an explanation, but got a incomprehensible response. This morning I received P800 saying the underpayment was £331 - without any explanation.

I'm really loathe to phone up and challenge then incase they decide I actually owe more!

dori2o

You say the code advised you that you had underpaid. Did it specifically say in 2010, or did it say that the underpayment was from an earlier year?

It could be either a) the £276 is from a year earlier than 2009/10, in which case you should have had notification of the calculation, or b) what has been included in the code is due to a code change in the 2009/10 year which lowered your tax code and at that time the system estimated (based on the amount the code changed, the number of days in the year and estimated salary held on the system) that the change in code would result in you being underpaid £276.

The P800 you have now received will be the actual underpayment for that year using the actual income, not an estimate.

You really do need to speak to HMRC as we cannot see where this original £276 has come from.