Please help me help my mum!

Pestcontrol_2

My Dad passed away last year, unfortunately in the midst of trying to sort out a HMRC claim for underpaid tax (2009/2010). He was meticulous at keeping records and felt the claim wasn't accurate, but didn't have time to complete the correspondence. We tried to help my mum get to the bottom of it - eventually they agreed to cut the bill in half, which my mum paid.

She's just received a second claim for underpaid tax for my Dad (2010/2011 - Dad passed away Nov 2010). He was on state and very small company pension, so we think it's unlikely this accurate, but we need to help her best we can.

Obviously no one can assess the case on here, but I'd be really grateful if people could point us in the direction of what info my Mum would need. She is going through:

Dad's state pension
His company pension slips
His work slips (though he stopped working in 2009, so I think this is unlikely)

We've advised her as a first step to phone them and ask them to explain exactly why they've come to the conclusion my Dad owes them tax.

We live at a distance, so it's difficult to help directly.

Thanks in advance
PC

Mikeyorks

What was the reason for the 1st underpayment? As the 2nd year normally shares the same origins.

But I can't really better your own advice which is to contact HMRC and ask them. In a deceased case I've found they normally pull out a few more of the stops - to help. Going in to one of their local centres (appointment first - so they can prepare) is probably optimum.

Bear in mind full allowances are due for 10-11 ........ you just need to check the income on the P800 fits with the records you should have. Post the figures on here if you want a cockpit check (income sources / values / etc from P800. And Code / Gross / Tax from final pension payslip + total state Pension paid)

cte1111

Firstly, in the tax year that a person dies, they are entitled to the full personal allowance for that year. How old was your Dad? If he is over 65 then he will be entitled to a higher allowance, although that is decreased if his income is too high (so far so clear I know sorry).

You then need to add together all your Dad's income, e.g. his gross pension amount, state pension and any savings income. This will give his total gross income for the year. Then knock off his personal allowance (£6475 if under 65, £9490 if 65-74, £9640 if over 75). This will give his taxable income.

To work out the total tax that should have been paid, take 20% of the first £37,400 of his taxable income, 40% of any income over £37,400, 50% of income over £150,000.

Then knock off any tax that he has paid at source, this should be shown on the pension pay slips and on annual bank statements for interest.

If there is anything remaining, then this is what is owed to HMRC.

antonic

If you need to go to a local Enquiry Centre on behalf of your mum then there are two important things you need :

1) A Letter of Authority from you Mum authorising you to act on her behalf and
2) 2 Forms of identity

Also they will try their best to stop you seeing someone face to face, they will insist on you sorting it over the phone or online, resist if your not happy doing so.

Mikeyorks wrote: »

What was the reason for the 1st underpayment? As the 2nd year normally shares the same origins.

But I can't really better your own advice which is to contact HMRC and ask them. In a deceased case I've found they normally pull out a few more of the stops - to help. Going in to one of their local centres (appointment first - so they can prepare) is probably optimum.

Bear in mind full allowances are due for 10-11 ........ you just need to check the income on the P800 fits with the records you should have. Post the figures on here if you want a cockpit check (income sources / values / etc from P800. And Code / Gross / Tax from final pension payslip + total state Pension paid)

Pestcontrol_2

Thanks everyone. I really want to relieve the pressure on mum as it's a rotten time.

So just to clarify: for a cockpit check, you would need
How much Dad's income was in 2009/10 and 2010/2011
How much he earnt in interest (gross?)
The tax code they put him on (really cross about this. As there was a query in 2009/10, we checked this with HMRC four times (unfortunately only verbally) for 2009/10 and 2010/2011
Tax from final company pension payslip
State pension income per month?

Thanks v much

Mikeyorks

Really only the figures from 10-11. As you've cleared 09-10? But it would be helpful if you knew the reason for the 09-10 underpayment.

For 10/11. All the data from the P800. Then the final payslip data (Gross / tax / code) from the pension provider - as P45s are completed, but you don't get a copy for sensitivity reasons. Then the State Pension total to the date of death.

You can add the gross interest if you wish - but that won't be on the P800 unless it had been coded out for some reason?

Savvy_Sue

In the process of doing an R27 for my Dad's tax affairs.

You can (eventually) get a letter from DWP confirming how much state pension was paid in the last tax year to the date of death, it took me two attempts because the first letter (bizarrely) gave me the weekly figures from July to the date of dad's death.

We also needed more than one attempt to get figures of total pension and tax deducted from his private pension provider, but we think we've now got those right.

Mikeyorks

Savvy_Sue wrote: »

You can (eventually) get a letter from DWP confirming how much state pension was paid in the last tax year to the date of death.

The State Pension is, unlike most things under PAYE, taxable when entitlement arises. Not when paid - if the two are different.

If weekly paid - it doesn't normally cause any problems. But can lead to oddities if 4 weekly. But those tend to manifest at the start of the cycle - rather than at the end.

Long way of saying - don't be surprised if any HMRC calculation shows slightly different figures to those you provide. But my limited experience of R27s suggests HMRC accepts what is given - unless they have something significantly different.

http://www.hmrc.gov.uk/manuals/eimanual/EIM74101.htm

Pestcontrol_2

Thanks everyone; as must be painfully obvious, we don't have much experience with this area so your help is much appreciated.
Just to clarify; when you say:
The State Pension is, unlike most things under PAYE, taxable when entitlement arises. Not when paid - if the two are different.
- what does this mean? That they take the tax off before they give it to you, so you don't have to worry about giving the taxman back anything?
And when you say:
Then the State Pension total to the date of death.
Does that mean, all the state pension my Dad ever received, or just what he received in that tax year?
We did actually complete an R27 shortly after Dad's death, but that doesn't seem to have stopped errors occurring.

Many thanks

antonic

The State Retirement Pension is NOT taxable BUT is a form of taxable income and so must be deducted from the personal tax allowance and the balance left over can be offset against other taxable forms of income.

The amount of pension to be included is the amount paid upto the date of death.

Pestcontrol wrote: »

Thanks everyone; as must be painfully obvious, we don't have much experience with this area so your help is much appreciated.
Just to clarify; when you say:
The State Pension is, unlike most things under PAYE, taxable when entitlement arises. Not when paid - if the two are different.
- what does this mean? That they take the tax off before they give it to you, so you don't have to worry about giving the taxman back anything?
And when you say:
Then the State Pension total to the date of death.
Does that mean, all the state pension my Dad ever received, or just what he received in that tax year?
We did actually complete an R27 shortly after Dad's death, but that doesn't seem to have stopped errors occurring.

Many thanks

System

antonic wrote: »

If you need to go to a local Enquiry Centre on behalf of your mum then there are two important things you need :

1) A Letter of Authority from you Mum authorising you to act on her behalf and
2) 2 Forms of identity

Also they will try their best to stop you seeing someone face to face, they will insist on you sorting it over the phone or online, resist if your not happy doing so.

Sorry but this last bit is wrong.
In normal circumstances, yes customers are directed to the helplines in Enquiry Centres. However Enquiry Centre staff know the difficulties the bereaved have in dealing with their loved ones tax affairs and realise that a face to face appointment is usually the best option for ensuring everything is sorted with the minimum of pain and fuss.