I've underpaid the taxman by £2500 ????

Doc_and_Jewel

Hi all, This is my first post so please be gentle.
I left the Army in May 2007 after 23 years, they kindly gave me 6 weeks paid leave. During that time i joined the Police and for about 6 weeks I recieved 2 wages. I telephoned my Army pay office to inform them of this and i was told, "dont worry about it, it will sort itself out and you will pay slighlty more tax for the following month". I did have a feeling that the person i was speaking to was having their tea break interupted!!
Anyway, my Army career finished 6 weeks into my Police career and i then started to recieve my Police pay as well as my Army pension. This carried on for 3 years, i was paying tax on both.
However, just before Christmas i noticed my Pension which is normaly about £750 had decreased by about £160. I telephoned the tax office who told me that i had not been paying the correct tax for about 3 years and that i owed them about £2500. I was told that it appears that there had been a communication problem between the Army pension provider and the Police and that one of them had been informed of the issue but not done anything about it. The person would not lay the blame on either one. So, i have just recieved a bill of £2541.40.
Over the last 25 years I have never questioned my pay statements and due to my ignorance, failure to understand, believing that my pay was always correct and being slightly numerically challenged, most of the time i dont even look at my pay statements.
I have been told to write and complain to the tax man, i have been told that they always ignore the first letter but tend to act on the second. I will pay anything that i genuinley owe but if the reason for the underpayment is because of other peoples communication issues then i feel this must be taken into consideration.
Any thoughts or advice please. Doc

Doc_and_Jewel

PS: can anyone please direct me to the letter this website has produced regarding appealing HMRC tax bills. I viewed it a few days ago but cant find it now. Regards Doc

Mikeyorks

Doc_and_Jewel wrote: »

PS: can anyone please direct me to the letter this website has produced regarding appealing HMRC tax bills. I viewed it a few days ago but cant find it now. Regards Doc

It's 75% of the way down this link (orange bar 'download template letter')

http://www.moneysavingexpert.com/family/check-tax-code#Underpaid

But ......... you're wasting your time using it in the light of what you say here :

I was told that it appears that there had been a communication problem between the Army pension provider and the Police and that one of them had been informed of the issue but not done anything about it

.......... that implies HMRC have acted on information available, which negates ESC A19 which the letter is aimed at? I'm a bit unsure what communication there should be between your 2 sources of income as normally they conjoin with HMRC. But there have been earlier threads regarding allegations of negligent operation of PAYE by forces pension providers. So it may be better concentrating on the para (2) in the 'What happens next?' leaflet which would be enclosed with a formal underpayment notice (P800 ... which you don't clarify if you've received)? There's a link to the leaflet here :

http://www.hmrc.gov.uk/p800/flyer.pdf

But I would attempt to clarify with HMRC the allegation that there has been a shortcoming in the operation of PAYE first ...... otherwise you're shooting with the wind a little?

jimmo

mikeyorks is very good with this type of problem, and a lot quicker than me so I rarely say anything but in this case you, as a policeman, should have a pretty good grasp of the concept of ignorance of the law is no excuse.
That is how your Tax Office will approach this.
There does appear to be a fundamental flaw in the system where, when a person retires the employer issues a P45 to the employee but also passes the P45 details on to the pension payer. Then, if you get a new job there is a very real danger that your tax personal allowance will be allocated twice.
Its not really a problem of communication between the pension provider and your current employer, they have absolutely no need to talk to each other.
When you joined the police force did you complete a P46 confirming that this was your only job whilst you were still employed by the Army? That would have been an offence.
Did you hand in your P45 from the Army when you got it, to your employer?
Did you, or should you, have realised that you were getting the benefit of 2 personal allowances when you were only entitled to one?
If you, as a policeman, caught me speeding in a restricted zone you would probably pooh-pooh any claims I made that I didn’t know it was a restricted zone and, quite frankly, your tax office will pooh-pooh your claims that you didn’t realise you were getting 2 personal allowances.
To use another analogy, were you guilty of stealing by finding when you accepted both your pay and your pension with tax deducted as if each was your only source of taxable income?

Doc_and_Jewel

Thanks Jimmo,
I obviously knew I was being paid 2 wages for about 6 weeks that is why I contaced the Army pay office who told me, "dont worry about it, it will sort itself out and you will pay slighlty more tax for the following month".
In hindsight, I should have not taken that as gospel. Also, as I was paying tax on both wages i did not understand what BR and 647L meant. I thought, I am paying tax, so i'm alright.
I think my ignorance of the Tax system plays a part, but the mistake by either the Police pay staff or the Army pay office must have played a part.