Employer PAYE Tax code error - help needed

gecko_

Hi there. I posted this same topic yesterday and got some interesting replies that have helped me hopefully explain the following problem I have better than before. Unfortunately I was informed my post wasn't really in the best Forum. So here it is and I really hope you can help:

I was made redundant two months ago after being with my employer for just short of 4 years.

On Friday last week I received a letter from HMRC with information stating that over the last 2 years my tax was underpaid by just under £9000.

This is a massive shock and completely unexpected. I'm not in work (although I look to have got a new job hopefully) and my wife has just given up work and gone on maternity leave as our first child was actually due two days ago. Hopefully this just paints a picture of why this is so urgent to sort out.

I spent the weekend investigating and going through all of my PAYE slips and earnings. I am not educated in any way about Tax or have I ever paid much attention to my Tax - never again. I've always been on PAYE for my entire career to date spread over 5-6 different companies.

The first thing I investigated was my Tax code. It has been BR for my entire employment at my last company - my P45 was handed in correctly. For the first 2 years of my employment I earned under the higher tax threshold so the BR tax code took approximately the correct amount of tax so no alarm bells ever rang over this. I've only just discovered that BR stands for Basic Rate. The 3rd year I had a little rise and some small bonuses pushing my earnings into the higher tax bracket but my most recent year, the 4th, I did well with bonuses and went quite far over the higher tax bracket - but didn't get these bonuses until the end of the tax year so month by month things looked fine. But BR was applied....

The calculations made by HMRC seem to be correct. I have indeed underpaid my tax for the 2010-2011 and 2011-2012. I can accept that as it is my tax. What I cannot accept is that nobody has ever informed me or my employer to avoid this situation arising so I called HMRC to ask a few questions.

HMRC informed me that in January before the 2011-2012 tax year started a new Tax code was sent to my employer but never actioned. They were keeping an eye on my situation (in their words) to avoid me being in this situation so in May 2011 they re-sent the Tax code to my employer but again the Tax code wasn't actioned. HMRC although unofficially could not point the finger were pointing the finger at my employer and advised I followed up the phone conversation with a letter saying I suspected my employer may have been at fault.

I have never received any P2's (I think they are called) or any information from HMRC indicating my Tax code needed to change or should be investigated.

So although I accept I have underpaid tax I do not accept it is fair for me to be placed into a position of hardship and serious stress due to my employer not actioning HMRC instructions to change my Tax code.

I contacted my previous employer who basically said that the company would not pay my tax for me and it is not their responsibility. I explained that twice HMRC are saying that requests were made and my employer denied receiving them and implied HMRC are incorrect or the requests were lost in transit.

So I am in a situation of HMRC saying they will investigate if my employer made an error. But my employer will point the finger at HMRC and HMRC will point the finger at my employer.

Where does this leave me? Do I have any right to expect that HMRC may look to my employer to cover my tax underpayment based on them being found guilty of failing to adjust my Tax code?

Do I have any right to seek damages from my employer for the hardship and stress caused as a result of their failure to action HMRC tax codes if they are not liable to pay my underpaid tax?

note: I have also discovered from calling HMRC and directly asking them as they didn't offer this information, that my first two years being on BR resulted in HMRC owing me a small amount of money. I never received anything about this at the time and HMRC had sent these out to the wrong address as they had not updated their records with a house move. This may explain a lack of correspondence from HMRC.

xylophone

so the BR tax code took approximately the correct amount of tax

Are you sure? Surely the BR code would have meant that you had no personal allowance at all and your allowance was being set against some mythical second job? http://www.hmrc.gov.uk/incometax/check-multiple-codes.htm
BR code
You'll see this on a PAYE Coding Notice for a second or additional job or pension if you pay tax at the basic rate. A BR code means you pay tax at 20 per cent on all of your second or additional earnings or
pension income because your tax-free Personal Allowance has already been used up on your main job or pension."

If you have had this code for four years you have had no personal allowance for four years?

HMRC although unofficially could not point the finger were pointing the finger at my employer and advised I followed up the phone conversation with a letter saying I suspected my employer may have been at fault.

Have you done this?

and HMRC had sent these out to the wrong address as they had not updated their records with a house move. This may explain a lack of correspondence from HMRC.

HMRC had sent what to the wrong address? Had you advised HMRC that your address had changed?

I assume that you have your copy of the P45 from four years ago and your P60's for the tax years you were employed by your last employer and your latest P45.

Can you supply these figures to the forum?

Did you receive any benefits in kind from your previous employers?

gecko_

xylophone wrote: »

Are you sure? Surely the BR code would have meant that you had no personal allowance at all and your allowance was being set against some mythical second job?

BR code
You'll see this on a PAYE Coding Notice for a second or additional job or pension if you pay tax at the basic rate. A BR code means you pay tax at 20 per cent on all of your second or additional earnings or
pension income because your tax-free Personal Allowance has already been used up on your main job or pension."

If you have had this code for four years you have had no personal allowance for four years?



Have you done this?



HMRC had sent what to the wrong address? Had you advised HMRC that your address had changed?

I assume that you have your copy of the P45 from four years ago and your P60's for the tax years you were employed by your last employer and your latest P45.

Can you supply these figures to the forum?

Did you receive any benefits in kind from your previous employers?

Okay, so I have never had two jobs at once. I have no idea why my tax code would be BR. When I spoke with HMRC they too had no idea. All they said was that they were made aware prior to the tax year 2010-2011 and made adequate actions to address this by supplying my employer with the correct codes. I do not get any additional allowances with any of my previous jobs - no pensions, no car, no expenses, no benefits in kind etc.

In my previous job before moving to my last employer I can confirm my tax code was not BR. I cannot find my P45 for this job change which is frustrating but i'm pretty sure a P45 was used or at the very least a P46 would have been used.

I seemed to always get anything from £500-£1000 back from HMRC at the end of most Tax years but figured I was just paying a little too much tax which is better then not paying enough. To be honest I thought this was perfectly normal, but I now realise this was my tax allowance.

HMRC are sending me a payment of just over £1000 to cover previous years of tax allowance. They originally sent this to my old address and I did advise them of my change of address when I moved. I got suspicious about a year ago when I noticed that my payslips early in the 2011-2012 year still had my address incorrect. I informed my employer who said payroll were using the wrong details. A couple of months later my address still had not changed so I called HMRC to correct this. My payslips never had my updated correct address on them, but when I recently called HMRC to investigate the current problem they did indeed have the correct address on their records.

So there is a chance, HMRC had sent me details of a tax code change but when I have spoken to them on the phone all they said was that a tax code change had been issued to my employer and it was them that had to action the new code. I've definitely not received anything from them regarding this and can only assume that the incorrect address was used if indeed they did.

HMRC are changing my Tax code so BR will not be an issue going forward. I am happy that HMRC have calculated what they owe me and what I owe them correctly. My issue is that HMRC twice requested my Tax code to be changed before the 2010-2011 tax year and during the 2010-2011 tax year and my employer did not action this at all on both occasions.

I really do not question the tax I owe. I have had the money so I need to pay the tax.

As a result of my employer failing to do what I understand they are legally obliged to do I have been hit with a large and unexpected tax underpayment placing me and my family into hardship and stress.

So I am still asking the same questions I guess:

Do I have any right to expect that HMRC may look to my employer to cover my tax underpayment based on them being found guilty of failing to adjust my Tax code?

Do I have any right to seek damages from my employer for the hardship and stress caused as a result of their failure to action HMRC tax codes if they are not liable to pay my underpaid tax?

xylophone

http://www.hmrc.gov.uk/thelibrary/tax-paye/employer-errors-deduction-paye.pdf

This might be worth a read.

I think that you will have to write to HMRC and "finger" your last employer(s).

Then you'll need to wait for a formal reply.

Pennywise

So HMRC claim to have sent revised PAYE coding notices.

But neither your employer nor yourself have received these.

Sounds more like a problem at HMRC's end doesn't it?

PAYE coding notices are automatically sent to both the employer's and the employee's addresses, so if neither of you got them, it's more than likely HMRC didn't send them.

sweetietot

gecko_ wrote: »

HMRC are sending me a payment of just over £1000 to cover previous years of tax allowance. They originally sent this to my old address and I did advise them of my change of address when I moved. I got suspicious about a year ago when I noticed that my payslips early in the 2011-2012 year still had my address incorrect. I informed my employer who said payroll were using the wrong details. A couple of months later my address still had not changed so I called HMRC to correct this. My payslips never had my updated correct address on them, but when I recently called HMRC to investigate the current problem they did indeed have the correct address on their records.

HMRC will not inform your payroll of changes of address and do not process your payslips.
If your employer's payroll department was not updating your address when you know they have been informed, can you be sure they didn't ignore tax coding notices?

CLAPTON

maybe forget about blame and all that nonsense and post up your details for the last 4 years and we can check what tax you owe or are owed

System

Why don't you do what I said on my previous post and check if HMRC definitely did issue the codes. As I stated before both codes should have issue under the P2 (your copy) and P6 (employers copy) onscreen. If it says not issue then that means the code was created but not actually sent out. That would be HMRC's error.

If it confirms the codes were definitely sent out then you can appeal under employer error.

They can also tell you your address history and when they updated your address on their systems. That should be an indication of when they became aware of your move.

All of these details can be viewed onscreen during an appointment at your local HMRC enquiry centre.

It was unfortunate that your income was so far into the 40% bracket that the BR code didn't cover the tax due. Normally a BR code means a refund would be due.

gecko_

CLAPTON wrote: »

maybe forget about blame and all that nonsense and post up your details for the last 4 years and we can check what tax you owe or are owed

I'm not questioning the tax I owe. I am asking a question about responsibility of underpayment of tax in the circumstances the employer has made an error.

I believe this is indeed the case as HMRC have confirmed electronic 2 requests were sent to my employer to change my tax - they failed to do this and HMRC will not investigate why.

gecko_

Pam17 wrote: »

Why don't you do what I said on my previous post and check if HMRC definitely did issue the codes. As I stated before both codes should have issue under the P2 (your copy) and P6 (employers copy) onscreen. If it says not issue then that means the code was created but not actually sent out. That would be HMRC's error.

If it confirms the codes were definitely sent out then you can appeal under employer error.

They can also tell you your address history and when they updated your address on their systems. That should be an indication of when they became aware of your move.

All of these details can be viewed onscreen during an appointment at your local HMRC enquiry centre.

It was unfortunate that your income was so far into the 40% bracket that the BR code didn't cover the tax due. Normally a BR code means a refund would be due.

YES - HMRC definitely issued the codes. They have confirmed this. I will arrange a meeting at my local HMRC enquiry centre to make sure. Looks like HMRC will be investigating everything and I hope the out come is employer error.

CLAPTON

did you receive the notice of codings