Tax underpayment – employers fault or mine

withabix

Mrs_Arcanum wrote: »

Is there not some correlation for tax purposes on the actual business miles? This may only apply to those who use their own car for business purposes though.

No. Number of business miles in a company car ceased to be relevant to tax liability approx 10 years ago.

Monkey_Joe

withabix wrote: »

No. Number of business miles in a company car ceased to be relevant to tax liability approx 10 years ago.

So how would I proove that I only use my company car for business?

Its looking more and more likely that it will be me who has to pay up and not my employer despite it being (imo) their fault since they were clueless to the UK tax system.

I fear that they will plead ignorance and say that it was my duty to inform them since Im English! However, I disagree since I was not the first UK person they employed and hence they should have experience with the UK system and secondly its not my job to do their tax/benefits work.

withabix

Monkey_Joe wrote: »

So how would I proove that I only use my company car for business?

Its looking more and more likely that it will be me who has to pay up and not my employer despite it being (imo) their fault since they were clueless to the UK tax system.

I fear that they will plead ignorance and say that it was my duty to inform them since Im English! However, I disagree since I was not the first UK person they employed and hence they should have experience with the UK system and secondly its not my job to do their tax/benefits work.

If you have kept mileage records and have only been reimbursed for business mileage, then that's all the proof you need, however that isn't relevant to the tax owed for the company car. The car is the taxable benefit - it doesn't matter what you used it for. Taxable value is 'List Price x (a % multiplier based on CO2 emissions)' and you mutliply that by your top tax band (20% or 40% but may be partly in both if you are close to the threshold) to get the tax payable.

As for who owes the tax - it will be you. Whether your employer reimburses you is up to them - very very unusual though.

Savvy_Sue

withabix wrote: »

As for who owes the tax - it will be you. Whether your employer reimburses you is up to them - very very unusual though.

There are situations in which the employer has to pay tax from previous years, and cannot reclaim from the employee, however.

We had the situation where our payroll bureau realised that two of us had been set up with the wrong kind of pension on their system: they had us down as having a 'company' pension when it was in fact a 'stakeholder' pension. As a result we'd paid too little tax for two years. I am fairly sure it was HMRC who said that although the back tax tax had to be paid, it could NOT be reclaimed from the employees if it should have been paid in a previous tax year.

I am not sure if this is relevant to the OP's situation, however, because P11Ds weren't involved for us.

One thing M_J, you keep talking about being 'blamed' for this, and in your first post you were obviously worried about some awful penalties being imposed. It's true that you will (almost certainly) have to pay this tax, BUT there won't be a big black mark against your name; no-one will ever know this mistake was made; it won't be held against you in future. If I say that HMRC are quite forgiving of mistakes, as long as they don't suspect you of fraud, I hope that will reassure you. I don't even think there is a fine involved for this kind of mistake - wilfully not returning a self-assessment form does incur a fine, but not knowing you had to ask for one does not.

Monkey_Joe

can somone please provide me with a link to something official which states that it is my employers responsibility to declare the company car when I first recieved it and then at the end of each year via the P11D? I am unable to find it on the HM REvenue and Custom website.

I accept that I am partly to blame I should have noticed something was wrong via the tax code but Im not tax savy and made an honest mistake. Whereas my employers HR department/Finance team who deal with our salaries should know this since its their jobs. Do I have a valid argument here or am I wrong? Is is possible for my employer to plead ignorance since they are French and blame me for not telling them or the tax office? I was not the first UK person they employed and had a company car, so they should have experience. I need something official on a webiste to prove this otherwise they will try to weasel out of taking responsibility.

JCS1

http://www.hmrc.gov.uk/paye/exb/overview/p46car.htm