can't pay income tax

cowsnhope

Hiya
From aug 2010 to july 2011 I was employed but my employer never paid my tax as she said I was self-employed even though I wasn't (apparently illegal but also apparently I've no rights here - I've checked). I now have a very large tax bill which I can't pay except by putting it on my credit cards. The Inland Revenue gave me a number to phone to discuss this but before I phone them I thought I'd see if anyone knew what I might be able to ask for and if doing this will affect my credit rating?

Secondly; my current tax is now really messed up too and I'm not paying any - I've only ever just been a normal employee and I don't want the stress of self assessment - I'd like my tax to be PAYE but because of the job I had when my employer didn't sort it out I seem to be stuck with self assessment and I don't know how to get out of this mess.

Any advice would be really appreciated - thank you

CLAPTON

how were you paid ?
did you receive a payslip
did you receive a P60 after teh end of tax year 2010-11
how much did you earn in 2010-11
how much are the HMRC asking for?

how did the matter come to a head
have you filled in a self assessment for 2010-11?

are you still working for the same employer?

agrinnall

Your problem is going to be that you've admitted that the employer told you that you were self-employed (even if that wasn't correct), you therefore must have known that your tax wasn't being paid by PAYE so you should have taken resposibility yourself to put money aside to cover the tax on your earnings. Your best starting point will be to ring the HMRC number you've been given, explain the situations, see what they suggest and report back here for more help, although before then give the answers to Clapton's questions in case anything useful comes out of that.

zzzLazyDaisy

Speak to HMRC and explain the situation.

There are legal tests for determining if a person is an employee or self employed. If the employer has wrongly labelled a worker as 'self-employed' when in reality that person was an 'employee', then the liability for unpaid tax falls on the employer, not the employee.

As for self assessment forms - once you are in the system, HMRC will often send the self assessment forms out for some time afterwards. However, this does not prevent you from being an employee, or from paying tax through PAYE. You just have to complete the relevant sections of the form and return it with a note confirming that you are employed by (name and address of employer) and pay tax via PAYE, and have no other work to declare. Eventually the message will get through and they will stop sending the self assessment forms.

cowsnhope

Hi CLAPTON
Thank you for your reply. I'm not still working for the same woman - she sacked me with only one weeks notice as she was angry with me for trying to get paid the natonal minimum wage and for asking to be taxed through PAYE. I did not get payslips etc. I submitted a self assessment tax return and my bill is £2686 - I did a lot of hours but they are also asking me to pay towards the 2011 - 2012 account - I've spoken to them about this as I'm earning a lot less now and they've said they can reduce this part of the payment but I'll still have a bill in the reagion of £2000. I'm not fighting the tax bill - I just don't have the money and am looking to find out what I can ask for - CAB seemed to think I could get the tax deducted from my current wages over two years but I don't know if that's realistic. I can pay it on my credit card but would really like to avoid the interest if it doesn't affect my credit rating to tell the inland revenue I'm struggling to pay - which I am.

agrinnall
Thank you for your input also.

cowsnhope

Quote

There are legal tests for determining if a person is an employee or self employed. If the employer has wrongly labelled a worker as 'self-employed' when in reality that person was an 'employee', then the liability for unpaid tax falls on the employer, not the employee.


Thank you zzzLazyDaisy
Unfortunately this is what I thought too; I was employed - I've done the tests, but I still have to pay - I spent ages looking into this and even though my employer was responsible its me thats got to pay. I've mainly adjusted to this now.

On self assessment - my current employer is not deducting my tax - I think because untill I do an assessment for 2011 - 12 it looks to the inland revenue that I've not earnt anything and so haven't earnt enough to start paying tax. I can see myself keeping having to fill these forms in for years as each employer won't pay my tax because it doesn't look like I need to. It doesn't actually make any sense to me so I'm probably not expalining it well.

CLAPTON

can you explain about your current employment
when did you start that
is that PAYE?
did you fill in a P60 when you started
do you get a payslip? if so what does it say? gross, taxcode, tax , NI

cowsnhope

Hi CLAPTON
I should be on PAYE but they are not deducting tax from me. When I started I couldn't give a P45 as I didn't have one so they got me to sign something but I don't know what it was. I get pay slips, my last one says
gross pay £210.00
income tax £0.00
national insurance A £8.52
net £201.48
Tax code 747L
I get paid weekly

Thank you for trying to help

CLAPTON

you haven't said when you started employment

You are entitled to 7475 per annum tax free (that's what 747L means
this tax free amount is divided into the 12 months i.e. 623 per month without paying tax

so if e.g. you started PAYE work in October you can earn 7 x 623 = 4360 before you pay tax as you had no PAYE work in the first 6 months of the tax year


so it looks correct that you are paying no tax on your PAYE earnings at the moment.

cowsnhope

Hiya
I started my current job in september 2011; However from the begining of that tax year in April to July I was working for the woman who didn't pay my taxes - I will have earn't more than £7475 for this financial year by now - the only thing is that untill I do my next self assessment in Jan 2012 the tax office won't know that - which is why I think I might be stuck in a loop here.

cowsnhope

sorry - CLAPTON but are you saying that because I was on self assessment I'll still be able to earn £7475 before tax kicks in even though I was earning - just not on PAYE? Cos if this is the case then that's really good news.