Some Urgent Tax Advice needed for my dad

tranmereforever

Hello all,

My dad was made redundant in 2009 and received redundancy pay for this from his employer ( A major breakdown recovery company ), he has received a letter from HMRC to say that the employer calculated the tax for this wrong and it was charged at 20% as opposed to 40% tax meaning that he has to repay £10,000

They have given him a time frame for this ( 90 days ) but he is really struggling in this economic climate to find that sort of money

Obviously he was not trying to avoid tax, he has worked for over 35 years and it has always been done by his employer- as was the redundancy pay- so he believed that what he had been given was accurate and correct

Has he got any options here and what are they? If he was to have 6-12 months I am sure that he would be able to raise the money, are HMRC likely to accept this?

Any help would be greatly appreciated as obviously this has left him very worried at the moment

Mikeyorks

Be a bit more specific about the letter (is it a P800 - for example?). And how the '90 days' is phrased?

dampsquib

All the facts and figures would be useful too, in order that the size of the underpayment can be double checked.
Date he was made redundant.
Normal pay & tax details to that date.
Date compensation payment was paid.
Amount of compensation.
Tax deducted from compensation at the time of payment.
What other taxable income (if any) did he have in the tax year that the compensation payment was made.
Judging by what you have told us so far, if the £10,000 underpayment results from an extra 20% being due on his compensation payment, that would seem to indicate that his payment must have been £80,000 at least.
(80,000 - 30,000 tax free = 50,000 taxable
50,000 x 20% = £10,000)