Underpayment of Income Tax - Who is to blame?

dori2o

Jollyjak wrote: »

Thanks so much for your time and the information, I was hoping that the silly questions would come to an end - HOWEVER!!

I have just got home from work to find a P2 with a new tax code from 6 Apr 2010 to 5 Apr 2011 as follows:

University: BR which replaces 409T
Pension: 68L which replaces 254L

It also says that it is for the whole year - will my employer and pension provider re-calculate what I have paid so far and adjust accordingly, or is it just for the remainder of this tax year?

They have obviously noticed an error somewhere as it says on the back that they have calculated an underpayment and I owe them £349.68 - is this in addition to the original amount?

Hopefully, I will soon be able to contact them? - is there a quick way to get through, and can I speak to my own Tax office(s) as I have been speaking to many different parts of the country so far!!! It says if you want to talk it through then please contact them - there is only the 'phone and listen to 15 different options' number!

Sorry for so many questions, but it is becoming more and more frustrating / confusing by the day!

What is the income received from both sources? Do you have any other income, i.e. state benefits? If so how much?

jennifernil

If I was in this situation, I would sit down with all my paperwork in a quiet place and work out each year in question. It really is not that difficult.

Gather all your pay/pension slips, and a calculator.

For each tax year in question, add up all your income from different sources, subtract the personal allowance for that year (figures available on the HMRC website), and work out how much tax you should have paid.

Then compare that with what you actually paid.

Then you can see how much you are due to pay (or get refunded) for each year.

The general perception is that tax is complicated, but really, if you just sit down and think it through, it is pretty simple.

If you have all the figures, know the allowances and tax bands, then it is just simple arithmetic.

jimmo

I don't think anyone has yet got to the root of what went wrong here. You might not like this but here goes.
When I retired from HMRC I did not get a P45. My former employer passed it, (probably not a physical piece of paper but electronically) on my behalf, directly to my pension payer. I did not get another job and did not qualify for state benefits. My correct Code Number migrated to my new pension and all went smoothly.
When you retired from the Armed Forces you former employer appears to have done a similar thing by passing on your P45 details to your pension payer but also sent you a paper version of the P45.
In other words, your former employer issued 2 forms P45 and that is the cause of the problem. Had your former employer only issued one P45, lets say the electronic version passed onto your pension payer you would not have had a paper version in your possession and would not have been able to pass it on to your new employer.
Had your former employer only issued the paper version to you, then your pension payer would have been chasing you for it but, either way, you would only have been able to deliver your P45 to one body.
So, whilst your former employer appears to have done wrong, I am afraid that you have contributed significantly to the problem by handing your paper version of your P45 to your new employer.
If I had been in your situation I would have known better because of my background as a Taxman. Should you have known better? I really don't know but HMRC always has the old adage that ignorance of the law is no excuse.
First and foremost, HMRC did not cause your problem but they have found it and are acting upon it.
Subject to what dori2o may have to add about timings, your new employer has done nothing wrong in processing the P45 that you gave them.
Your pension payer has done nothing wrong by accepting in good faith, the P45 details supplied to it.
The fault lies either with your former employer or with you.
HMRC are pretty powerless to take action against your former employer for its failings because HMRC can only recover from your former employer any tax which it has failed to deduct from you and the maximum penalty it could impose is a proportion of the same tax, nil.
HMRC therefore, quite rightly, want the tax you have underpaid from you.
If you take up the cudgels against your former employer and you succeed in laying the blame completely at their feet what can you expect in compensation?
Well the general situation seems to be that your personal tax liability is your personal liability. Any compensation you can expect will be in respect of the additional cost to you as a result of their failure. i.e how much more this has cost you compared to your situation if the correct tax had been deducted from you at the correct time.
Sorry.

Jollyjak

Thank you all for your responses and assistance. I have just had a lengthy conversation with a helpful chap at HMRC and penned quite a long letter of appeal. I will let you know how I get on!!

DS999

As I have also just fallen victim to the Armed Forces Pension tax underpayment issue; I can understand your plight, although my pain is even greater, just under £11,000. I hear the cries from the detractors claiming we should all have known, but the truth is when you are on PAYE for 26 years and then your pension provider states that you do not need to worry about tax as they will adjust as necessary; you tend to trust them as that is what you have been conditioned to do. It seems that there will be others who have served there country who will now be 'stiffed' by the same people you fight to protect. (Apologies for pulling that one out!) I too was subjected to a rude and unhelpful tax employee; that does not help!
There must be a way to prevent this forces pension fiasco in the future or some pressure applied to allow some dispensation for somewhat niave and overly trusting soldiers, sailors and airmen.

molerat

The strange thing is that I had to fight to get anything other than BR set against my pension even when I was unemployed after leaving the service and again when I retired early and my AFPS pension was my main income. The tax office must take some responsibility but it is up to you to know what is going on. The general lack of financial awareness amongst the population is why this country is in the mess it is.

Buster1874

I have a similiar problem as well built up over three years. Why on earth HMRC can't link two seperate incomes through the same NI number and sound the alarm bells straight away defeats me.

Pennywise

molerat wrote: »

The general lack of financial awareness amongst the population is why this country is in the mess it is.

OK, accepted, but when someone has spent their lives having tax deducted at source, never having had to complete a tax return or even contact the tax office, then it's a bit hard on them when suddenly things go pear shaped. The problem is that HMRC stopped doing the annual reconciliations. If that wasn't bad enough, they didn't publicise the fact that they'd stopped doing them. So basically, people just carried on in ignorant bliss thinking that their tax was OK, as it had been always been OK in the past.

Made worse by communication problems in that it's hard to phone them and they don't answer letters promptly (if at all), made worse by the re-organisations where they've closed loads of local offices and centralised them often in offices hundreds of miles away, or even in a different country (Just why are limited companies in Lancashire dealt with by the Dundee tax office?). I know a fair few cases where HMRC have been told of new sources of income but simply ignored them.

Had HMRC actually told everyone that they weren't doing the annual checks for a couple of years, then people would have been put "on warning" that their tax may not be right. Trouble was it was the same old "denial" within HMRC that they either didn't know something was wrong, or they know but didn't want to tell everyone!

molerat

I agree that HMRC need a good kick up the !!!! and they have got worse over recent years. My own relatively simple problems were made overcomplicated by two offices fighting against each other, one working off of real figures and the other seemingly dreaming them up and changing what the first office had done (last year "this is because of your annual pension increase", what happened to pension increases last year !!) . Luckily I knew what was right so could see what needed to be done. People do not help themselves though. When clearing out lockers after staff had left the amount of unopened payslips and even unopened P60's found was frightening.

Jollyjak

Opened up a bit of a can of worms here!! Still waiting for a response to my letter sent on 22nd February - have been told it may take up to the 12 April to respond. I have also contacted them to ask the situation regarding repayment whilst the appeal is pending - the answer was that 'the manual doesn't say anything about charging interest, but it doesn't say anything about not charging either" ?????? how helpful was that then? Anyway, the fight goes on and I will post when I have some further news.

Cheers all.