tax refund dilemma

HXDave

Hi all,

Just wondering what your thoughts were on a situation that has arisen with a friend of mine who goes into our local social club. We have discussed it round the bar, and everyone seems to have different ideas. Here's the situation.

This friend was with an employer for about 5 years, and then left to join another company (this happened about 15 months ago). With his old company, he got all his wage slips & P60's as they should be, showing tax / NI deducted etc etc etc........

However, now he has recieved a P800 (i think), which is a tax recalculation form, and it covers about 5 of the past 6 years. On 2 of these years it shows the the amount of income earned drastically less than what he was actually paid (and, as an example, if his final wage slip for the tax year showed he had earned £19000, the P800 shows that his employer only declared he had earned £11000).

Because of this, and calculations worked out over the years, he has now got a tax refund of approx £1500.00.

What would you do? in effect, his old employer had fiddled his tax payments, and has effectively stolen money from him (by means of deducting tax & not passing it onto the HMRC). However, on the other hand, he desperately needs the £1500.00 sent by the tax man. As yet, he does not know if his NI has been paid properly yet, and is doubtful to check in case it sparks further investigation, and thus puts a threat to the £1500.00 he has just recieved.

Anyone any advice / suggestions i can give to him?

HXDave

xylophone

As yet, he does not know if his NI has been paid properly yet,

This could certainly be a problem.https://forums.moneysavingexpert.com/discussion/comment/56162389#Comment_56162389 post 5

If he is not happy that he is owed the refund he should put it in an interest bearing account pro tem and sort the matter out with HMRC.

TM1976

IMO it's much more likely to be HMR&C's error than 'your friend's' employer on the fiddle.

The employer must have paid over the correct amount of tax otherwise there wouldn't be anything to refund when the P800 was produced.

The only honest thing to do is to contact HMR&C and tell them the figure is wrong.

HXDave

hi TM1976,

From what i can gather, it seems like my mates old employer has not put through to HMRC his full earnings, and therefore as he hasn't (theoretically) used all his allowance up, he hasn't had to pay the amount of tax declared.

If it was me, i would be happy to contact the HMRC because, whilst the refund would be nice, i am not in a position where i am desperate for it. Instead, i would rather query the refund, but at the same time also query the figures they are using, and hope this would trigger an investigation against my ex emploer for tax irregularities. However, the tax refund is a great help to my mate who is not in the same financial position as me, and he desperately could do with the money.

Dave

TM1976

You miss the point.

The employer must have paid the tax on £19,000 to HMR&C, otherwise why would your friend get a rebate when they reconciled his tax liability and stated his income was £11,000. The tax on the difference is £1,600.

If the employer reported to HMR&C his income was £11,000 and only deducted the tax due on £11,000 he wouldn't be due any rebate.

Therefore the reason he's got a rebate is because HMR&C have entered the wrong income on his P800, even though his employer has paid over the right amount of tax.

If HMR&C have been paid tax on £19,000 of income and your friend has been paid the salary as if he earned £19,000 the employer hasn't benefited, neither have HMR&C.

The only person who's fiddling anyone is your friend who knows HMR&C have made a mistake on the calculation but wants to keep the refund he's got out of it.

chrismac1

You don't have to look far on this site to see HMRC blunders left, right and centre. There's one thread on the go right now about a guy whose employer entered his income 3 times. Instead of challenging this with the employer, HMRC just spat out a tax demand.

In your case, it is highly probable as the previous poster has said that the employer has done the right thing and either submitted it incorrectly or - more likely - somewhere in the wonderful HMRC system 2 plus 2 has made 1.

This sort of thing generally gets discovered sooner or later - well in HMRC's case 2 years or so down the road. If in the meantime the cheque has been cashed then at the very least the encasher can't claim to be taking reasonable care.

And tax fraud is one possible line of attack too. Just not worth it.

System

Deleted by poster

System

Deleted by poster

System

This friend was with an employer for about 5 years, and then left to join another company (this happened about 15 months ago). With his old company, he got all his wage slips & P60's as they should be, showing tax / NI deducted etc etc etc........


OP your post #4 is plausible.

It's more likely to be a reporting problem with one of the employers rather than anything sinister. It's also possible there has been HMRC error - but would have been more likely if the year in question was 2007-08 or earlier. After that there's very little (if any) manual input by HMRC in producing P800s.