Underpaid Tax - Elderly Mother

mandymoo72

Hi Guys

My elderly mother received an underpayment of tax for £1300 in Oct 2010 for the years 2008/09 and 2009/10 to which i applied for them to write it off under ESA19 - she received no word from them so i wrote to them again in Jan/Feb 2011 which she got a reply stating they are still looking into it. I have tried calling a few times but never get through. she has never heard any more about this underpayment. Also this morning she received an underpayment of tax for £531 for 2010/11. After looking into all of this she has been given a tax code of 747L instead of a BR code (she should be on BR code because she also gets a pension, so any income over and above her allowance should be taxed on the BR code)

She has worked for the same employers for the last 30 years (albeit part time and she is now only on around 6 hours with them) and I thought that they would have updated their systems especially after sending her the underpayment of £1300.

I don't know if they have written off the original underpayment of £1300 and if they have why haven't they told her? They are a complete nightmare to get through too.

She is still working and obviously accumlating underpayments of tax whilst on the 747L code. so she is growing concerned re this and wants her tax code changed to stop accumulating a tax underpayment.

Any advice and help appreciated.

thanks

Mikeyorks

BR taxes everything at 20% ..... so that most likely isn't what she should be on. It sounds as though the pension provider should be operating BR and the main employer 747L. On income up to £42475 - that would get it right.

Who pays the pension? What Code is used against the pension? And has your Mother initially advised HMRC she was receiving it? Either directly or with a P46 via the pension provider.

bobthedambuilder

This article http://www.moneysavingexpert.com/news/family/2010/09/tax-chaos-qa-how-to-avoid-paying-- seems to suggest that as the underpayment in 2009-10 was notified within 12 months of the end of that tax year, the ESC A19 provisions will not apply unless there are "exceptional circumstances". So she may still be liable for at least some of the £1300 underpayment. Similarly for the 2010-11 underpayment.

It is difficult to see from your post whether your mother or her employers gave the necessary information to HMRC to enable them to alter her tax code. I suspect HMRC's default position will be that either this information has not been provided, or it has and they've acted in good time.

You should persevere and write (or continue writing to them) asking for explanations, and perhaps citing any "exceptional circumstances". I would put the letters in her name or have her confirm that you are acting as her official representative.

In the meantime, as both you and she are clearly aware that she is underpaying tax, I would strongly suggest that she puts money aside to cover the underpayment demands which will inevitably come until the PAYE situation is sorted.

xylophone

How old is your mother?
Does she receive a state pension? How much is this per annum?
Does she receive a private pension? How much is this per annum?
How much is her salary per annum?

Can you post the answers to these questions so we can see where she should be now.

Looking back - when did she start receiving her pension/pension and a salary?
If this was in 2008 then go back through her records and answer the questions above for 08-09, 09-10, 10-11. Look up the tax bands appropriate to those years and see where you are.

Savvy_Sue

bobthedambuilder wrote: »

In the meantime, as both you and she are clearly aware that she is underpaying tax, I would strongly suggest that she puts money aside to cover the underpayment demands which will inevitably come until the PAYE situation is sorted.

Very good idea!

mandymoo72

Hi Guys

Mother received her tax code for remainder of 2011/12 which is 117P. She also received notification that HMRC have issued a code of BR to her employers.

Question is, if they are aware that she had employers why didn't they pass on the BR code last year and therefore she would have tax deducted from her earnings every week and not land an underpayment bill.

Does anyone think ESA 19 would apply here? HMRC know she has employers and I know people need to take responsibility for their own tax affairs (i.e. looking at your payslips) but it can be very confusing for people. My mother thought cos she didn;t earn over the weekly tax threshold she was not liable for tax (her employers had her on 747L code). just wondering if its worth submitting letter to HMRC.