Will I get my employer into trouble?

pinkteapot

I am employed and paid PAYE. I was due a couple of additional payments on my salary (bonuses effectively) and my company asked for my bank details. They paid the money by direct bank transfer instead of through the PAYE system. :eek:

I've been paid it gross so should request a tax return from HMRC to declare it (I don't currently complete tax returns). But, will HMRC then work out why I've underpaid tax and come back on the company? I would assume the company hasn't paid Employer's NI (and anything else they pay on salaries) on this money.

I don't want to get into trouble with work for getting them audited or something. :eek:

I shouldn't have given them my bank details - I should have asked them to pay it through normal channels.

Horace

Surely the company would have had your bank details anyway so that they could pay your wages in by BACS?

Your employer has to account for any payments made from their accounts to their employees, customers, suppliers, etc and would include these in their tax returns. The HMRC will investigate anyway if they think that procedures haven't been followed correctly.

Maybe you should speak to your employer if you are concerned that they haven't paid the tax on your bonus payments instead of running to the HMRC.

HappyMJ

Normal channels? That is paying you directly into your bank account or in cash. What do you mean by normal channels?

Did you get a payslip with this money? If not then just ask for one.

I'd leave it. It's the responsibility of the company to pay tax and NI on the payments. You do not need to assume anything.

pinkteapot

I'd only be running to HMRC because I haven't paid tax. I've received the full, gross amount. I assume that the only way for me to pay my income tax owed is by doing a tax return (?).

I was just concerned that in doing so I'd inadvertently get questions asked of the company. The money came from the bank account of the foreign company that owns the UK company I'm employed by (the CFO, based in the foreign company overseas, didn't want the UK accountant who runs payroll knowing about the money). If they have to account for everything to HMRC anyway, then I guess I wouldn't drop them in it.

pinkteapot

HappyMJ wrote: »

Normal channels? That is paying you directly into your bank account or in cash. What do you mean by normal channels?

Did you get a payslip with this money? If not then just ask for one.

I'd leave it. It's the responsibility of the company to pay tax and NI on the payments. You do not need to assume anything.

I'm paid monthly by our payroll company, and get pay-slips, P60s, etc. This was a bank transfer from a foreign account for the full gross amount, no pay slip. I won't get a pay slip because our payroll company don't know about this payment.

Surely I'm responsible for my own income tax, and if I know I haven't paid some on some income then I have to declare it or I could get in trouble? If not, then I will just leave it...

Although thinking about it, asking for a payslip is a good idea. Act dumb and see if they'll give me something and if they do I'm in the clear from a personal tax perspective??

This is a weird place to work since we got taken over by the foreign company. They don't really know or follow UK employment practices.

pinkteapot

Last question...

The payment to me was made in late March so was in the 2011-12 tax year. I've had my P60 and, because this payment didn't go through Payroll, the total gross income shown on my P60 does not include this additional payment. My gross income is under-stated on my P60.

Am I obliged to inform my employer of this or is this whole thing their problem?

I've put the tax liability on the payment aside in my bank account, assuming I'll have to pay it somehow at some point. But I'm scared of HMRC finding me in five years and slapping me with a huge fine or something!

tyllwyd

I think you should put all the money to one side for the moment, and go and talk to your UK HR department about it. If you go to HMRC first without giving the company a chance to sort things out, you could end up over-complicating the situation. To cover yourself, I would put the problem in writing to HR, so it is clear that you have not tried to hide anything.

(I'm not a tax expert, but if you pay tax under self-assessment, the tax for 2011-12 isn't due until January 2013, so you would have until then to fill in the form and pay the tax, so you should have a few months to try to get it all sorted out without worrying about being in trouble with HMRC.)

pinkteapot

We have no UK HR department. There are no HR staff in the company at all. It is a small UK Ltd company that, since last year, is owned by a foreign company.

There is an accountant in the UK office but the CFO based overseas said that this extra pay was confidential and I'm not allowed to tell anyone in the UK office, so I can't talk to the accountant.

The payment was made by bank transfer from an overseas account to my personal account. The amount received was the full gross amount and it's not included in my gross income on my P60.

Last year, they (foreign company) cut a benefit that employees in the UK got. I negotiated with them as it was a very valuable benefit to me and so they offered a one-off bonus payment to partly offset the loss of this benefit. This is the payment in question which was received in March.

Since I'm under orders not to discuss it with anyone in the UK, do you think my best course of action is to contact the CFO (they are CFO of both the foreign and UK companies now - the accountant here reports to them) and say that I have noticed that the gross pay on my P60 is incorrect?

tyllwyd

That sounds really complicated! But if the UK accountant is responsible for handling UK payroll and filing UK accounts, if they don't want anyone in the UK to know about this money, I wonder if that's the reason they've tried to short-cut the system and pay you direct. But that would make it even more complicated if HMRC contacted him to ask about this payment, he'd know nothing about it.

It's too complicated for me, I don't have the knowledge to advise you! Is there any way this could be regarded as payment for work done for the foreign company, not involving the UK company at all?

pinkteapot

I suppose it could be. As I said, the reason the CFO wanted to pay me directly is that to go through the payroll company they would have to tell the accountant based here, and they didn't want to. I've been paid out of the foreign company's bank account which the UK accountant has nothing to do with.

Frankly, if they'd paid it to me as cash in a brown envelope I would have kept it at home, spent it gradually and not worried as much about it. However, I am worried that HMRC will find out about it since there's a transfer in to my own bank account from the foreign company's account (plus emails between myself and the CFO discussing payment), and then I'd get in serious trouble for tax evasion.

Problem I have is that people in the foreign company aren't very approachable. If I make a fuss, I'll probably end up losing my job. They aren't afraid to sack people around here!

I posted a thread previously about an employment related issue - should give you some idea of what this place is like.
https://forums.moneysavingexpert.com/discussion/3863491

System

Sounds very much like a back door payment. Maybe they thought that they were helping you by doing it this way because they do not understand the UK tax structure.

It raises the question of who else is getting payments that they can not talk about. Methinks this is a bucket of worms rather than a can and it will get very messy when you tell HMRC about this other payment.