P46

bisla

My partner has been notified of very sizable tax underpayments for years 2007/8, 2008/9 and 2009/10. In March 2007 he started a new job, at the same point in time he was receiving an occupational pension and all his tax allowances were set against this. He didn't have a P45 from his previous employer so he completed a P46 and ticked box C to highlight the fact that he was in receipt of an occupational pension. HMRC actioned the P46 and issued the tax code BR. This was the wrong tax code as it failed to capture the fact that he should have been paying tax at the higher rate on his salary. The BR tax code remained in place until he had to retire from work permanently due to a disability in 2009. It was never picked up on by us at the time. This was due to my partner's disability which was impacting on both his physical and mental capacities. As well as a progressive disability he also had two spells in hospital for surgery in the tax years in question.

I have tried to reason with HMRC regarding the underpayments. Mostly on the grounds that my partner did all he could in completing the P46 and ticking box C. Did HMRC not have a duty on actioning the P46 to at least attempt to marry the two sources of income and issue an accurate tax code? Is there not some sort of work item or work flow they have to follow which is dependent on which box of the P46 is ticked? If there is such a workflow or procedure would this not have led them to issuing an accurate tax code?

HMRC reply in respect of actioning my partner's P46 is, 'we followed the PAYE guidelines in setting up a secondary record and issuing code BR'.

Can anyone please advise if correct procedure was followed in actioning the P46 and issuing code BR. Could or should HMRC have done more?

dori2o

bisla wrote: »

My partner has been notified of very sizable tax underpayments for years 2007/8, 2008/9 and 2009/10. In March 2007 he started a new job, at the same point in time he was receiving an occupational pension and all his tax allowances were set against this. He didn't have a P45 from his previous employer so he completed a P46 and ticked box C to highlight the fact that he was in receipt of an occupational pension. HMRC actioned the P46 and issued the tax code BR. This was the wrong tax code as it failed to capture the fact that he should have been paying tax at the higher rate on his salary. The BR tax code remained in place until he had to retire from work permanently due to a disability in 2009. It was never picked up on by us at the time. This was due to my partner's disability which was impacting on both his physical and mental capacities. As well as a progressive disability he also had two spells in hospital for surgery in the tax years in question.

I have tried to reason with HMRC regarding the underpayments. Mostly on the grounds that my partner did all he could in completing the P46 and ticking box C. Did HMRC not have a duty on actioning the P46 to at least attempt to marry the two sources of income and issue an accurate tax code? Is there not some sort of work item or work flow they have to follow which is dependent on which box of the P46 is ticked? If there is such a workflow or procedure would this not have led them to issuing an accurate tax code?

HMRC reply in respect of actioning my partner's P46 is, 'we followed the PAYE guidelines in setting up a secondary record and issuing code BR'.

Can anyone please advise if correct procedure was followed in actioning the P46 and issuing code BR. Could or should HMRC have done more?

The responsibility to ensure you are on the correct code rests with the individual.

It will have been the case that HMRC were unaware of the level of income from the job started in 2007. They are not told what the salary is at the time the job started.

If you were aware that the 2nd job should have been taxed in full, or partly at the higher rate then it was your responsibility to inform HMRC of this.

HMRC have received the P46, set up the record, and issued a BR code on the basis that you (your husband) ticked box C to state they had another job or pension. That is all the form indicates, and HMRC have followed the correct proceedure.

There is in fact no requirement for HMRC to issue a BR code upon receipt of a P46 with statement C ticked IF the employer has indicated that this is already the code in operation.

easy

dori2o wrote: »

The responsibility to ensure you are on the correct code rests with the individual.

It will have been the case that HMRC were unaware of the level of income from the job started in 2007. They are not told what the salary is at the time the job started.

If you were aware that the 2nd job should have been taxed in full, or partly at the higher rate then it was your responsibility to inform HMRC of this.

HMRC have received the P46, set up the record, and issued a BR code on the basis that you (your husband) ticked box C to state they had another job or pension. That is all the form indicates, and HMRC have followed the correct proceedure.

There is in fact no requirement for HMRC to issue a BR code upon receipt of a P46 with statement C ticked IF the employer has indicated that this is already the code in operation.

Ah BUT, when HMRC received a P14 for this employee at the end of tax years 2006/7 and 2007/8 they should have been aware of his income at that point, and issued new codes to his employer at that stage. The fact that they didn't compounded the problem.

OP, it may be worthwhile taking a look here http://www.ukbusinessforums.co.uk/forums/showthread.php?t=179615 to see if you can get any help with this.

dori2o

easy wrote: »

Ah BUT, when HMRC received a P14 for this employee at the end of tax years 2006/7 and 2007/8 they should have been aware of his income at that point, and issued new codes to his employer at that stage. The fact that they didn't compounded the problem.

OP, it may be worthwhile taking a look here http://www.ukbusinessforums.co.uk/forums/showthread.php?t=179615 to see if you can get any help with this.

As the OP's husband started work in March 2007, assuming he received no salary on or before 5 April 2007 than a P14 would not be applicable for 2006/07. This means HMRC would have been unaware of the level of the income from the job until as late as the end of May 2008 when the first P14 would be received.

Secondly, in Jan/Feb 2008 HMRC will have issued tax codes to the taxpayer in preperation for the forthcoming 2008/09 tax year. The taxpayer had ample opportunity at this point to rectify the position.

System

I have to agree with dori2o on this one. The OPs' partner should have seen that he was only paying tax at 20% across the two sources of income and he should have contacted HMRC to get the tax codes corrected.

I cannot see how later ill health could be used as an arguement to say he did not deal with the situation whilst he was in work, so that would not be a valid excuse in my opinion.

CLAPTON

by april / may 2008 HMRC will have had the correct income details for the tax year 2007-8 so they should have issued a proper code for 2008-9 and subsequently for 2009-10 and reclaimed the back tax for 2007-8

notwithstanding the fact that the OP should have known he was paying too little tax, there seems reasonable grounds for complaint to HMRC under ESC A19 concession

chrismac1

I say clear cut grounds! I have managed to get 2 clients off 2007-8 higher rate tax demands so far. Firstly let's look at what the whole "it's the taxpayer's responsibility" drivel requires:

1. The taxpayer needs to know their gross taxable income.
2. This includes knowing how much to gross up dividends and savings income by, that ISA income is not taxable, how much to gross up pension payments by to get the right reduction, how to calculate benefits in kind, the list is endless.
3. The taxpayer needs to know what the tax-free personal allowance is and where higher rate tax begins.

In my view steps 1, 2 and 3 rule out 99% of taxpayers. You don't have to take my word on this, the Tribunals and higher courts see it like this too. The good news is that we have people in this country who do know 1,2,and 3 within 3 months of each tax year-end. They are called HMRC. The problem is they are a shambles.

My message to the OP is that you are going to WIN on Esc A19. it will take up to 6 letters, search for "Esc A19" on this forum and you'll see most folk get fobbed off by HMRC at least 3 times before they finally cave in. Write a letter based on the conditions required on Esc A19 on the HMRC website, mention points specific to your case and only take notice of a reply by HMRC when specific information - dates, amounts etc. - in your letter is referred to. Chances are up to then you're just getting a computerised auto-reply in the hope you give up.

Keep going until they let you off!

BoGoF

Is there any of your posts that don't mention 'tribunal'. Aside from the fact, as I've pointed out on your other posts, a tribunal has no jurisdiction to consider HMRC's refusal of ESCA19.

And as an aside, from the recent tribunal cases I've been reading over the last couple of days HMRC are winning around 90% of the cases taken whereas you make it sound like HMRC are taking a beating

chrismac1

I didn't say a Tribunal had Esc A19 jurisdiction, merely that between what HMRC staff are taught about the extent of a taxpayer's rsponsibility and what the Courts find that to be lies a very big gap. I suspect you're reading the wrong cases, I know one accountant who has been to Tribunals 43 times and won 43 times albeit this spans more than 10 years.

BoGoF

So how does your post help the op then, if he can't appeal to a tribunal. You would have a lot more credibility if you stuck to the facts of the question rather than quoting tribunals that bear no relevance and general HMRC bashing.

The Tribunal hearings are in the public domain and the amount of 'appeal dismissed' cases would suggest I'm not reading the wrong cases.

chrismac1

The relevance is simple - don't be fobbed off by HMRC drivel, they are no better than the banks!