£8000 unexpected underpayment of tax due to a catalogue of errors with tax office and

family_man

£8000 unexpected underpayment of tax due to a catalogue of errors with tax office and employer, any help please.


Hi I wonder if anyone can help me at all

I have a huge unexpected tax bill, which my PAYE employer doesn’t want anything to do with nor does the tax office who say it is ultimately my responsibility.

The full story

I have been a part of a new supposedly top notch company which has just started and gone into full operation in the last 3 years. The problem is I have been on the wrong tax code with this company since I started and due to this I have just received a very large tax bill for just under £8000. I had no idea that this was accumulating for over two and a half years. This has come about through a catalogue of errors and I am just trying everything to see if I can get any help with it. I have appealed to the tax office as on their P800 notes it states that, ‘sometimes employers do make mistakes and they could be held liable for it’ but they have replied to me saying it is all my fault and to just pay up as agreed. My employer has also given me very little support with it.

This has all come about because my employer has no record of my P45 since I started even though I am sure I gave it in. I have had a meeting with the head of HR and he has admitted that they have made an error by not chasing up my P45 or following that up with a P46. He also said that it was an error on payrolls part (outsourced from the business) for overlooking it for so long. This error has then been made worse by HMRC by not sending out the tax bill for the previous year because they told me they were upgrading their computer systems. If I had known about this a year earlier it would have been bad enough but now it is unreasonably high. My employer has said that there are procedures now in place to stop this happening again with any new starters. I think it is grossly unfair to say I am solely responsible for all of this and if the correct procedures had been there in the first place this would never have happened.

I had no idea how tax codes work and I have never had any need to as it has always been taken care of by my employer in the past working PAYE. It is a failing by HR for not processing my p45 or following it up with a p46 and a failing by payroll for overlooking it for two and half years. This has all been compounded by HMRC by not sending me bills for 08-09 which has left me to pay a huge debt.

HMRC have given me the option to pay it off interest free over 36 months which I more or less had to agree too otherwise I would be put on self assessment or even charged. With my current financial and family commitments I haven’t got a spare £200+ for the next 3 years. I have agreed to pay it because I am a law abiding citizen, I have always paid my debts and I have never been in any sort of debt or trouble but I had no idea this debt was accumulating.

I am just about a higher rate tax payer and the money was earned in the process of helping start this business via the overtime, this extra money has made the situation worse. This money will not be there again and I will now have to pay this bill of out of my basic salary.

We are not talking a few hundred pounds but almost £8000, its scandalous. I am running out of options and any help would be greatly appreciated.

taxing

Take responsibility for your own affairs and pay up.

Regards.

family_man

taxing wrote: »

Take responsibility for your own affairs and pay up.

Regards.

That’s helpful, do you work for my employer or the tax office by any chance? I did think my affairs were in order as I put my trust in the experts in HR and payroll to sort that out for me, as they always have done in my last 20 years of working without fail until now. HR are supposed to be acting in the employees interest. I’m not an accountant or self employed how am I supposed to know how tax codes work. I’ve got a donkey work job and I have always done these, I have never been told in the past when I have started jobs to make sure I check what tax code I am on.

p00hsticks

family_man wrote: »

I had no idea how tax codes work and I have never had any need to as it has always been taken care of by my employer in the past working PAYE.

I have some sympathy with you, but it is really everyones responsibility to understand the basics about how tax codes work and check that theirs is correct, or query it with HMRC if not.

Your emplyer doesn't necessarily know about your entire income (as someone in a higher rate band, for example, you could also have had savings interest or dividend income that would have needed to be declared to HRC), so you can't just assume that they will take care of it all.

jem16

family_man wrote: »

The problem is I have been on the wrong tax code with this company since I started and due to this I have just received a very large tax bill for just under £8000. I had no idea that this was accumulating for over two and a half years.

What tax code were you on? I am going to assume BR and that you are a higher rate taxpayer as this is the only reason I can see that would result in underpaid tax.

I had no idea how tax codes work and I have never had any need to as it has always been taken care of by my employer in the past working PAYE. It is a failing by HR for not processing my p45 or following it up with a p46 and a failing by payroll for overlooking it for two and half years. This has all been compounded by HMRC by not sending me bills for 08-09 which has left me to pay a huge debt.

It really is up to the individual to ensure that they are being taxed correctly. Ignorance is no excuse. Your situation sounds very straightforward and you should really have been aware what tax code you were put on.

May2013

I feel for you Family_man, I had a similar thing happen to me last year.

I had wrongly assumed that payroll were managing my PAYE adjustments only to find, as has already been said, that making sure my tax code was correct was my repsonsibility. Needless to say the code was not right and I was landed with a £3500 tax bill that I've had to pay back over the last 12 months.

Unfortunately you are liable for the bill and the fact that they are prepared to allow you to pay it back over 3yrs interest free will at least make it easier....sorry I can't give you the answer you're looking for!

Mikeyorks

As post #5 ......... you're clutching at straws by blaming the problem on an AWOL P45. If the underpayment is compounded through 3 years then you must have been on Code BR yet been liable at a sizeable chunk into the 40% band.

So there's at least £20k you haven't paid tax on. HMRC are not going to write that off. And they won't switch the liability to your employer unless there's fairly significant evidence of negligence across a few other employees over the years.

family_man

jem16 wrote: »

What tax code were you on? I am going to assume BR and that you are a higher rate taxpayer as this is the only reason I can see that would result in underpaid tax.



It really is up to the individual to ensure that they are being taxed correctly. Ignorance is no excuse. Your situation sounds very straightforward and you should really have been aware what tax code you were put on.

The way its has happened is unacceptable, HMRC’s failure to notify me a year ago when they should have would have at least stopped it from going so horrendously high. It may be obvious to some people but you don’t know what you don’t know and if no one ever tells you then it can cause a big problem as it is. Ignorance is not an excuse is easy to say when it hasn’t happened to you or if you’re some fat cat with piles of money but unfortunately I’m not in that situation. One of the benefits of working PAYE is you should not have to do your own accounting as there are others in the business who have more knowledge of it.

In a very small workforce and over the course of two and half years, where HR are filling in tax forms every year for individuals and payroll are monitoring everyone’s payslips, you would have thought someone would have picked up a BR emergency tax code. It wasn’t just me who has had one of these bills.

jem16

family_man wrote: »

It may be obvious to some people but you don’t know what you don’t know and if no one ever tells you then it can cause a big problem as it is.

So you have money taken off you each month and you are not in the least interested to check if it's correct?

One of the benefits of working PAYE is you should not have to do your own accounting as there are others in the business who have more knowledge of it.

You are not having to do your own accounting. You simply have to find out what basic tax codes are. For most people, including you, the normal tax code is 647L.

you would have thought someone would have picked up a BR emergency tax code. It wasn’t just me who has had one of these bills.

No-one at work can pick up on a BR code except you as you are the only one who knows what your total income is. I have a BR code and for me it is correct. BR is not the emergency tax code - it's a code used for those with more than one source of income.

family_man

jem16 wrote: »

So you have money taken off you each month and you are not in the least interested to check if it's correct?



You are not having to do your own accounting. You simply have to find out what basic tax codes are. For most people, including you, the normal tax code is 647L.



No-one at work can pick up on a BR code except you as you are the only one who knows what your total income is. I have a BR code and for me it is correct. BR is not the emergency tax code - it's a code used for those with more than one source of income.

[FONT=&quot]I put my trust in people who know about these things and get paid for it. I know I have to pay tax and that’s it, I have even talked to people in HR after this incident and they have said we don’t really understand it fully either so what chance have I got. I was always led to believe that it was the employer's responsibility to deduct the correct amount of tax and to follow pretty straight forward procedures. If they had processed my P45 or if they misplaced that then they should have followed it up with a P46 then none of this would have happened.[/FONT]

jem16

family_man wrote: »

[FONT=&quot]I was always led to believe that it was the employer's responsibility to deduct the correct amount of tax and to follow pretty straight forward procedures.

The employer only deducts tax based on the tax code they get from HMRC.

If they had processed my P45 or if they misplaced that then they should have followed it up with a P46 then none of this would have happened.[/FONT]

Yes they probably should have done this. However you should also have been checking that your P45 was processed by keeping an eye on the tax code being used on your payslips.

Did you never wonder why BR was being used when you had a differtent tax code on your P45?