P800 has got me wondering....

thebirches

I received a P800 today for tax year 2011 - 12.

I have unpaid tax of £750.40

I have no idea why I have underpaid as my tax affairs are as simple as it gets, only one job PAYE and no other income.

What first caught my eye was the bank and building society interest for £220. For the last four years I have earned negligible interest, certainly nothing like £220, more in the region of £15 a year.

I phoned up HMRC and told them, they have asked me to supply proof (bank statements).

But that has got me thinking.

I am, and have been a 40% tax payer for about 10 years, but stopped doing self assessments in the year 2007 - 08 (which is where they got the £220 interest earned), not because I wanted to, just because I stopped receiving the form.

I pay into a personal pension, and gift aid to church and christian aid.

Am I right in thinking I haven't benefited from my personal pension contributions and the gift aid.

Can I do self assessment for the last four years?

Any help greatly appreciated, as I am really confused.

gt94sss2

thebirches wrote: »

I am, and have been a 40% tax payer for about 10 years, but stopped doing self assessments in the year 2007 - 08 (which is where they got the £220 interest earned), not because I wanted to, just because I stopped receiving the form.

I pay into a personal pension, and gift aid to church and christian aid.

Am I right in thinking I haven't benefited from my personal pension contributions and the gift aid.

Can I do self assessment for the last four years?

Yes, talk to HMRC. You may be able to complete a simple R40 rather than a full self assessment form or they may just ask you to write to them with details.Having said that filling online might be quicker.

You will not have got the tax relief on your charitable contributions and perhaps your pension scheme (though that depends on how the scheme operates)

Regards
Sunil

System

There should be no need for a tax return or R40 (strictly this form is for reclaiming tax deducted from savings income).

If its easier you can set out details in a letter. Id usually advise enclosing copies of any documents you have to back up your figures. Not always necessary but it can help to avoid delays.

jamesd

No need for self-assessment. You can just write a letter or phone them and tell them what you paid. If they need any evidence they will ask for it.

I'm assuming that the personal pension was paid into by you using after tax money and not by your employer in a salary sacrifice scheme using before tax money. If it was salary sacrifice you received the tax relief automatically by not paying tax on the money initially.

HMRC doesn't really want people in SA just because they are higher rate tax payers if they have fairly simple tax affairs like yours. Big increase in higher rate payers in recent years and it'd just waste their time.

thebirches

This whole mess has moved on somewhat from my original post.

I phoned the HMRC with regard to the incorrect bank savings interest amount, and was advised to write a letter and supply bank statements as evidence. I am now waiting for my bank to get back to me about the statments.

But it know appears my Tax code was entered wrongly by someone in accounts, where it should have been 873, 973 was entered.

I work for a small company - around 20 staff and it has happened to two of us. My collegue was advised by someone at the HMRC that we could have a case for this to be written off, he thought it might be wise for me to phone the HMRC for them to put a note on my account.

When I phoned up the HMRC and repeated what my colleague had been told, the taxman was not in the slightest bit interested. As I was getting knowhere with that point I moved onto the personal pension contributions. He told me that any difference due to paying 40% is in your next tax code. Is this true? I am now totally confused. If this is the case how do they know what my pension contributions are, as my contribution increases by 10% every year. So what are they basing it on?

Savvy_Sue

thebirches wrote: »

But it know appears my Tax code was entered wrongly by someone in accounts, where it should have been 873, 973 was entered.

I work for a small company - around 20 staff and it has happened to two of us. My collegue was advised by someone at the HMRC that we could have a case for this to be written off, he thought it might be wise for me to phone the HMRC for them to put a note on my account.

When I phoned up the HMRC and repeated what my colleague had been told, the taxman was not in the slightest bit interested.

If it relates to a previous tax year, then my understanding is that if your payroll dept makes a mistake, they CANNOT recover the underpayment from the employee. But that only applies to previous tax years.

I benefited from this when our payroll provider realised that they'd mistakenly set up our Stakeholder pensions as Company pensions, which made a difference to our tax liabilities if we'd made personal contributions. It was someone from HMRC who advised me of this, when I phoned up to ask how we'd pay the additional tax to them for earlier tax years.

thebirches

Thanks for the reply.

The rate the wrong code (973L) was used was for years 2011 - 12, I am now on 638L (for 2012 - 13).

I have had a search and have found on the HMRC website titled 'Employer errors in deduction of Pay As You Earn tax'.

'The circumstances are that your employer or pension payer did not take reasonable care to operate PAYE and the error was not made in ‘good faith’. In describing a ‘failure to take reasonable care’, this means failing to follow proper instructions to deduct PAYE tax from your pay or by failing to use Tax Code notices issued to them. Not made in ‘good faith’ means that an employer or pension payer may have known that they were not deducting the right amount of tax from you but took no action to correct their mistake.'

Does this mean I have a case or not? As I read it I might not as I assume it was a mistake and not done in malice.

If I was successful in challenging the underpayment, would they go after my employer for the money? As my boss is quite the psycho that's quite a scary thought.

Savvy_Sue

thebirches wrote: »

If I was successful in challenging the underpayment, would they go after my employer for the money? As my boss is quite the psycho that's quite a scary thought.

I'm not going to comment on whether or not you've got a case: if the employer made a mistake and you could not reasonably have been expected to know they'd made a mistake then you might be in with a chance (as in my case - how am I supposed to know how my pension's been set up and whether it's right or not?)

However, if they sent you a notice of coding which didn't agree with the one being used by your employer, then I think the argument will be that you could reasonably have been expected to know that there was a mistake and to be pro-active in sorting it out. (Which is the position one of my colleagues is in: only in that case our payroll says they haven't had a notice which says 810L, so they're still on BR!)

And yes, I believe they will go after your psycho employer if they're not seeking to recover it from you.

But the tax experts will confirm or deny this!

System

thebirches wrote: »

Thanks for the reply.

The rate the wrong code (973L) was used was for years 2011 - 12, I am now on 638L (for 2012 - 13).

I have had a search and have found on the HMRC website titled 'Employer errors in deduction of Pay As You Earn tax'.

'The circumstances are that your employer or pension payer did not take reasonable care to operate PAYE and the error was not made in ‘good faith’. In describing a ‘failure to take reasonable care’, this means failing to follow proper instructions to deduct PAYE tax from your pay or by failing to use Tax Code notices issued to them. Not made in ‘good faith’ means that an employer or pension payer may have known that they were not deducting the right amount of tax from you but took no action to correct their mistake.'

Does this mean I have a case or not? As I read it I might not as I assume it was a mistake and not done in malice.

If I was successful in challenging the underpayment, would they go after my employer for the money? As my boss is quite the psycho that's quite a scary thought.

Like savvy_sue I won't comment directly on whether you have a case - that'll be a matter between HMRC and your employer but I hope this helps.

The starting point is that it's your employers responsibility to deduct the correct tax under PAYE and they are liable for the shortfall if they have operated PAYE incorrectly. For example this could include failing to operate a code they received from HMRC. It wouldn't really matter whether you were aware of the problem.

HMRC wouldn't necessarily be aware of an employer mistake at the point they issue the P800 but if the taxpayer chooses to raise the 'employer error' with them they will.

If the employer admits they've made a mistake they can still ask that the liability be passed on to the employee if they can demonstrate they acted in good faith. This could mean, among other things, that they took all reasonable steps or had processes in place to prevent the problem but despite this something still went wrong. It's a little like distinguishing between an accident and negligence.

Just one word of warning these kind of disputes can take a long time to resolve.

thebirches

Thanks for the comments.

I phoned the HMRC again today and just asked why I had underpaid. It was confirmed to me that the wrong figure had been entered.

My employer has accepted it was their fault (but I suspect only because it was an outside accountants that inputted the figure, so they can argue it was their fault?), and have sent a letter confirming this, and I have a copy of the letter which I will attach to my letter which I will send to the HMRC.

I have found a template letter on the taxaid website which I will use.

I guess if you dont try then you'll never know.

System

thebirches wrote: »

Thanks for the comments.

I phoned the HMRC again today and just asked why I had underpaid. It was confirmed to me that the wrong figure had been entered.

My employer has accepted it was their fault (but I suspect only because it was an outside accountants that inputted the figure, so they can argue it was their fault?), and have sent a letter confirming this, and I have a copy of the letter which I will attach to my letter which I will send to the HMRC.

I have found a template letter on the taxaid website which I will use.

I guess if you dont try then you'll never know.

It sounds like a good start. But it's only going to end one of two ways. Either they'll pay up and settle the debt with HMRC or they'll manage to get the liability passed on to you.