Tax been overpaid - do I have to repay?

whatsyourfavouritecheese

I worked for a UK-based company for about 5 years, half of which was overseas. They had a tax-equalisation policy, so I 'paid' tax on my income to the company, and the company dealt with any 'real' tax. As it happened, I wasn't away long enough to go officially tax-free. However, PwC sorted out my self-assessments and the company settled up on my behalf. It never affected me as my salary was taxed at source. Anyway, this time last year I was made redundant, and had a whole load of hassle getting any redundancy payment despite a signed agreement, and was still sorting out paperwork well into the summer. Recently the company got in touch to say that they'd settled my 09/10 tax account, but randomly they've also paid money into my 10/11 account, and now need my permission for them to reclaim it. I'm hacked off as I left the company 12 months ago, and have had no dealings with them in this tax year. Aside from the moral issue (I'm not impressed with the company so I'm not bothered about that) - do I have to pay it back?

Savvy_Sue

I'm a bit confused by this. I don't think they'd be reclaiming it from you, but from HMRC. Not sure why they'd need your permission to do that?

DVardysShadow

Savvy_Sue wrote: »

I'm a bit confused by this. I don't think they'd be reclaiming it from you, but from HMRC. Not sure why they'd need your permission to do that?

Looks like OP was personally responsible for his tax and the company were paying on his behalf. Therefore the only person who HMRC could refund to is OP.

dseventy

whatsyourfavouritecheese wrote: »

I worked for a UK-based company for about 5 years, half of which was overseas. They had a tax-equalisation policy, so I 'paid' tax on my income to the company, and the company dealt with any 'real' tax. As it happened, I wasn't away long enough to go officially tax-free. However, PwC sorted out my self-assessments and the company settled up on my behalf. It never affected me as my salary was taxed at source. Anyway, this time last year I was made redundant, and had a whole load of hassle getting any redundancy payment despite a signed agreement, and was still sorting out paperwork well into the summer. Recently the company got in touch to say that they'd settled my 09/10 tax account, but randomly they've also paid money into my 10/11 account, and now need my permission for them to reclaim it. I'm hacked off as I left the company 12 months ago, and have had no dealings with them in this tax year. Aside from the moral issue (I'm not impressed with the company so I'm not bothered about that) - do I have to pay it back?

If you were owed money from tax, would you want that to be paid back?

Theres your answer.

D70

Savvy_Sue

DVardysShadow wrote: »

Looks like OP was personally responsible for his tax and the company were paying on his behalf. Therefore the only person who HMRC could refund to is OP.

Well yes, and I'm no expert with any of this, but if the OP no longer works for this company, and for all we know is no longer responsible for his own tax, and the company has paid money to HMRC which isn't owed, then surely the company can offset what they've overpaid against what they still owe, IYSWIM?

Our company has occasionally overpaid to HMRC in one month, and therefore underpaid the next to set it right. Sometimes it's covered more than one year. I know that's PAYE rather than personal, but I can't see why the same principles don't apply.

DVardysShadow

Savvy_Sue wrote: »

Well yes, and I'm no expert with any of this, but if the OP no longer works for this company, and for all we know is no longer responsible for his own tax, and the company has paid money to HMRC which isn't owed, then surely the company can offset what they've overpaid against what they still owe, IYSWIM?

Our company has occasionally overpaid to HMRC in one month, and therefore underpaid the next to set it right. Sometimes it's covered more than one year. I know that's PAYE rather than personal, but I can't see why the same principles don't apply.

If your company makes an underpayment, then they are taking back their own money, because they are taking responsibility for the tax account in question.

But for the OP, if the former employer takes money back, they are taking back money the OP is responsible for paying. HMRC are only in a position to say that the OP should get any surplus, because OP is the person they will chase in the event of a shortfall. For HMRC to pay back the employer would require a signed release from the OP.

whatsyourfavouritecheese

DVardysShadow wrote: »

If your company makes an underpayment, then they are taking back their own money, because they are taking responsibility for the tax account in question.

But for the OP, if the former employer takes money back, they are taking back money the OP is responsible for paying. HMRC are only in a position to say that the OP should get any surplus, because OP is the person they will chase in the event of a shortfall. For HMRC to pay back the employer would require a signed release from the OP.

To clarify - the company is asking me to sign a release so HMRC can refund it to them directly. As it is for the current tax year I'm figuring I need to wait until my tax affairs are in order before I request any refunds (whether to myself or my previous employer).

My main reason for not just blindly agreeing is that this isn't an overpayment as a result of a miscalculation - it is a payment that should never have been made. I've spent the past year signing various releases to sort out their mess for the tax years they did have a legitimate interest in, and am fed up with it, hence the lack of any moral issue.

DVardysShadow

It is an interesting one. I don't think you have any obligation to sign a release, let alone pay anything back. But equally, HMRC are being perfectly correct in not paying back without a release. You could consider asking for an investigation fee of £200 and a release fee of £25 ...