Tax codes and P60's help please.

jojo_the_joyful

Hello, I'd like a bit of clarity if posible relating to a tax demand for the tax year 2007/2008.

Here is the time line.

June 2007 : Hubby retires from army.
July 2007 Army pension commences at his 575 Tax code ( or similar)

July 2007 He rejoins the army, a different branch, but did not get paid for a few months.

October 2007. He phoned the tax people and asked for his tax codes to be changed so his work had his tax code and his pension was basic rate.

December 2007 and January 2008, we get letters confirming the above tax code allotment changes.

May 2008. We received 2 P 60's. One showing his wage taxed at his tax allowence and the second taxed at basic rate.

November 2011 We get a letter saying we have paid to little tax but we don't have to do anything because it will be collected via his tax code in April 2012.

December 2011. We get a letter that said "As we have not heard from you, you need to fill out a tax retun etc.

March 2012 We sent a covering latter with the tax return along with photocopies of all correspondance and P 60's

May 2012 We are told "we are right, you are wrong you have to pay."

May 2012 We finally managed to apply for an ESC A19. The first girl said we had 3 P 60's and one of them had 2 tax codes on it ????????
(Not the ones I sent) Then when we finally spoke to an officer she wasn't interested in parts 2 & 3, What information they didn't act on and why we thought our tax affairs were in order.

Needless to say our ESC A19 was turned down The reason being :

"The underpayment arises due to duplicate allowences received against the MOD pension and employment"

Now, before I appeal, we are going to contact the pensions people, but I am wondering whether the blame lies with them.

I understand how tax is calculated etc, but if the tax codes were changed mid year, surely the new tax codes would be applied to the whole income for that tax year.

This would mean The pension that changed from 575L to BR, would pay a heavier tax to start with until the whole balance was calculated at BR .

Also what happens with the information on our P60's ?

Is it all passed to the HMRC ?

I am thinking they have had this information since May 2008 and failed to act on it until November 2011.

If it turns out the pensions people have made a mistake, do I have to ask them to repay the tax, or do HMRC apply for it & if so how do I going about setting all this in motion.

Many Thanks

Joanne.

sarahk100574

May 2008. We received 2 P 60's. One showing his wage taxed at his tax allowence and the second taxed at basic rate.

Joanne - two P60s should not be issued for one period of employment - are you sure that one wasn't for the employment and one for the pension?

Did he actually receive a P45 on leaving the army in the July?

How much pay & tax, and pension & tax were actually paid for the year? If the amount of tax deducted is less than the amount of tax actually due, then yes you have to pay it.

The whys and wherefores of who is at fault are all largely irrelevent. The onus is on the tax payer to ensure the correct amount of tax is paid ultimately.
(What I mean by this is that even if the army/army pension service or HMRC were negligent/lax/slow - you as the tax payer still owe the tax outstanding.)

Hope this helps, although its probably not what you wanted to hear sorry

jojo_the_joyful

Thank you SarahK for your speedy reply.

Yes the P60's were issued by a) the army and b) the pensions, and yes he did receive a P45 which was given back to the Army when he was re-employed.

What I am confused about is the ESC A19 decision. They had the information about the tax codes and had the information on the P 60's issued in May 2008 but did not act on that information until 3 1/2 years later.

The P 60's indicated the right tax codes had been applied and not being accountants and being part of the PAYE scheme I feel it is unreasonable to expect average Jo Bloggs to analyse and recalculate to check if the pay people are doing their job right.

But thanks again

I will still appeal, I just want to collect enough facts to help the case.

CLAPTON

what were the figues on the P45
what were the figures on the 2 P60s

jojo_the_joyful

The figures on the P45 are consistent with what is on both P60's

Pension P60


Pension payments £5,247.24 Tax £326.80

Prior earnings £6948.00 Tax £1,174.12

Totals £12,199.24 Tax £1,500.92

Tax code BRM1

Army P60

This employment £14, 562.40 Tax £2,140.32

Previous employment £6,948.94 Tax £1,174.12

Total £21,511.34 Tax £3,314.44

Final Tax Code 522L



I have a letter from HMRC dated 28 jan 2008 that states : Your new tax code for 2007/8 is 522T which replaces your BR

We know you have another job, or pension. We have used some of your allowances to give you a tax free amount at this job or pension.

To me that says they knew (had information) that one job had allowences applied etc and knew there was a second income but didn't ensure the BR was used there.

sarahk100574

Hi Jo-Jo,

So what has happened is that the pension was being taxed for some months (Approx June/July - Octoberish) using a cumulative annual allowance tax code (you said 575 or similar - I suspect it may have been 522).

When you contacted HMRC they then applied a tax code of BR - M1 (a non cumulative code). THis means that pension was taxed correctly each month from then at basic rate, but the earlier underpayment of tax was not collected as the M1 means each pay period is calculated on a 'stand alone' basis from then on.

It seems that the P45 from the Army was given (by your dh??) to both the pension provider AND again to the army for his new employment. They have both used teh 522L cumulative code. Seems weird to me, as how would he have the P45 to give to both iyswim? Although P45 info will have been submitted on-line so possibly the pension service didn't actually take the P45 from your dh. I can see how that would be confusing tbh. he probably then gave it in to his new role and therefore duplicating the information.

He should raelly have filled in a P46 to say he was already receiving pay/pension elsewhere and he would have been taxed at BR on the employment.
Its possible that the confusion has arisen when he called them to ask for full tax code allowance at new job. They have issued it and issued BRM1 to pension but by then the damage was done and he had already been underpaying the tax due for the year.

Anyway, I'm quickly surmising as I'm travelling at the mo, BUT it seems to have been a !!!! up caused by one or more factors, including your dh 'handing in' his P45 twice.

The A19 will most likely have been refused due to this aspect of the case in my opinion. I think I may have said earlier, but unfortunatley the onus is on the tax payer to ensure that tax is being deducted correctly. I doubt the army pay or pension service will pay on his behalf. Long and short is that the tax has not been collected but dh still owes it.

jojo_the_joyful

Hi again.

Many months later.

After many months passing i have some clarification.

Only 1 P45 was handed in, back to the army when he was re-employed by them.

Our first ESC was refused. The operator on the phone told me she didn't need to know the details of why we were applying for the concession.

Following this we received a really nasty letter threatening us with court, bailiffs etc. I was sick with worry, literally and contacted my MP. He intervened on my behalf. I got a letter back from HMRC, in very nice terms, apologizing for the distress caused but we still had to pay and explained why. In a nut shell, they had acted correctly.

I wrote back (as invited to do so) explaining why I thought the ESC appliue applied. It was because by them issuing the BRM1 tax code on the pension instead of BR that the arrears developed.

They wrote back saying basically as the tax code was applied so late in the year, to claim back the tax owed would have resulted in large amounts of the pension being taken up and posibly causing hardship, That is why it is their policy to issue the M1 code, although he appreciated that with hind-site this may not have been to our preference.

So I wrote back again, explaining that in January 2008 when they applied the BRM1 tax code they were aware that there would have been a short fall for that year and did not act on it until Nov 2011 3 1/2 years later, well beyond the 2 years set about in the concession for acting on the information they have.

Today I received a lovely letter appologising. Our case has been revied & we have had the Tax owed waived under the concession.

Not only that, we are being offered £30 compensation as an apology, £50 compensation for the way they insisted on the self assessment return and £10 towards correspondence costs.

We were not expecting that & are so grateful ( I will be writing to thank him when we get it)

The debt had got as far as being passed on to layers despite my repeated telling the debt collection team the debt was under dispute.

Thank you all on this site (not just this thread and your wonderful help) for giving me the confidence to persevere and see it through. I feel a HUGE wait has been lifted from my shoulders.