Tax bill help!

LaraLou_2

Sorry if this is a tad long.

I'm totally confused and not sure how to deal with this.
I have recieved a few letters for hubby from HMRC saying he hasn't paid enough tax. I am in the process of getting his P60's from his employer to check tax codes ect.

Just a bit of background, hubby is on half sick pay from his employer and he also recieves incapacity benefit.

The first letter is from the tax year 07-08 when he went started to recieve half pay and incapacity benefit stating that he has underpaid by £366. He is paying his tax and NI via his employer on PAYE.

The second letter is relating to this tax year 10-11 stating that his he has underpaid by £285 and that they will be collecting both underpayments by changing his tax code in April to K162.

What I think I need to know is whether we can appeal this as he was paying via PAYE and the 1st underpaid notice is over 12 months old.
Also just to make it more difficult, the company he works for is making his whole department redundant in October. So if he had to pay it all back would he need to pay the balance in October?

Mahmood_Reza

Two quick points: (1) You always have the right to appeal. they will consider the reasons behind it and decide accordingly - eg how the mistake occcured; (2) you will not normally have to pay in full and can arrange an instalment option with the "time to pay" section - number via HMRC site.
On a related point on the K code. Even taking into a/c the 'underpayment' of tax the code looks wrong & your husband may end up paying too much tax - I am assuming that your husband does not receive any taxable benefits, in addition to salary/wages. HMRC should have sent a coding notice explaining how the code is worked out

chrismac1

Google ESC A19 and also look on this site for links. Your husband has a clear case for claiming relief on 07-08 under this concession providing he did everything he should have done - such as filling in tax forms like P46s correctly with his employer and so forth.

For 2009-10 (and 2007-08 for that matter) please post up the details of income and tax paid by your husband, per P60s and P45s. I have just posted off letters to HMRC concerning an employee of a client of mine. He had been assessed over £1,000 for 07-08 and over £1,400 for 08-09. The correct figure for 07-08 was just £256 and my new client did everything correctly, his former employer was not doing things properly - so Esc A19. it will take months and months but in the end no tax to pay.

The £1,400 for 08-09 was just a schoolboy error. Both employers my client worked for had done the calculations correctly. True amount of underpayment was in fact 80 pence. Expect blunders from HMRC and you won't be disappointed! I don't promise there is one here but post up the details and we'll see.

Mikeyorks

chrismac1 wrote: »

his former employer was not doing things properly - so Esc A19.

ESC A19 doesn't apply to employer error. Except where a formal direction has been made by HMRC to the advantage of the employer. And that won't materialise on a P800.

Expect blunders from HMRC and you won't be disappointed!

............ hmmmmm.

chrismac1

http://www.hmrc.gov.uk/esc/esc.htm

I've read and re-read this notice and can't see where it says ESC A19 cannot apply in the case of employer error. In fact it says:

"This information can come from a variety of sources - you, your agent, your employer or the Department for Work and Pensions (DWP)."

So to me it follows from that that if an employer sends HMRC inaccurate or incomplete information, and the taxpayer is unaware of this which he or she will be 90% of the time, they are entitled to ESC A19 because as far as the taxpayer was concerned all was in order. What am I missing here?

Mikeyorks

chrismac1 wrote: »

What am I missing here?

The very basics ...... that ESC A19 relates purely and simply to HMRC delays in using information. It has no read across to employer error.

That link can only be established if HMRC makes a formal direction (Reg 72(5)) that the employee is responsible for the underpayment. At that point - and that point only - the potential of ESC A19 becomes possible. As clearly indicated by HMRC :

PAYE Errors Unit (PEU) has sole responsibility for transferring any employer liability onto the individual by issue of a Direction. It is only at this point that the individual could make a claim under ESC A19.

they are entitled to ESC A19 because as far as the taxpayer was concerned all was in order. What am I missing here?

Again - the basics. The belief that 'your affairs were in order' is a supplementary factor (to the delay) within ESC A19. It's not a freestanding one. It's an 'and' ...... not an 'or'.

chrismac1

In these cases, by defintion such a transfer has been made, albeit not explicitly. HMRC has raised assessments on the taxpayer not the defaulting employer. The taxpayer can show he or she had reasonable belief that affairs were in order. It is reasonable to believe that your employer has performed his or her statutory duties, surely? In the case of the OP, it seems to me that HMRC had all the information needed to get things right back in May 2008. They waited three years to assess the tax.

Mikeyorks

chrismac1 wrote: »

In these cases, by defintion such a transfer has been made, albeit not explicitly.

If not explicitly - then no determination has been made. In which case ESC A19 can't be claimed - as your original - on the basis of 'employer error'. If you claim 'employer error' then it's a completely different process within HMRC.

chrismac1

We are not claiming employer error, we are claiming:

Reasonable belief that your tax affairs were in order

dori2o

chrismac1 wrote: »

We are not claiming employer error, we are claiming:

Reasonable belief that your tax affairs were in order

That is not available as a claim on its own.

HMRC must fail the time test AND the customer must believe that their tax affairs were in order.

Reasonable belief alone is not acceptable under ESC A19.


To me it looks like the following situation has happened.

07/08 IB started but HMRC have not received the details from DWP and the customer has not made contact to advise.

07/08 has been reconciled within the 10/11 tax year, the tax code for 10/11 has been updated to include IB and the system has calculated that potentially there will be an underpayment of £285.

The code for 11/12 of K162 would suggest that (assuming there are no employer benefits in the code) that the level of IB in the 2011/12 tax year will be approx £112 per week, or aprox £5849 per year with the underpayment accounting for a reduction of £3255. However as IB is approx £85 per week I would agree that the code looks somewhat odd.

If this scenario above is correct and HMRC were not informed of the IB starting, then I cannot see that ESC A19 would apply.

However this is all speculation. OP, I would advise you to contact HMRC and get an explanation of why this underpayment has arisen. Post the reason here and also post the figures from the assessment and the code for 11/12

Mikeyorks

chrismac1 wrote: »

We are not claiming employer error, we are claiming:

Reasonable belief that your tax affairs were in order

Posting in bold doesn't impress. Nor does your understanding of ESC A19. Which is fairly simple to both read and comprehend.

As I said at the end of post #6 :

The belief that 'your affairs were in order' is a supplementary factor (to the delay) within ESC A19. It's not a freestanding one. It's an 'and' ...... not an 'or'.

I don't find that difficult .... why do you?