I am PAYE with a tax shortfall of 16K

Gordon_hutton

Hi all,

I am new to the forum so not sure if this is the right place to post but i am looking for some help, actually i am pretty desperate.

Last year i got a tax bill for the 2007/2008 period where even though i am a paye employee the calculation was wrong based on my tax code being wrong. This bill was for 4.5K. I disputed the bill but was ultimately forced to paye. When i asked how i was supposed to pay i was asked if I have anything to sell. I has been tough but i have now fully paid this bill. Now i have just recieved a letter from hmrc saying that i owe them a further 11K for the tax period 2008 to 2011. I have always been a PAYE employee. Have only one income and have never been anything other than honest. With regards to TAX i didnt ever give it much thought, the money was simply taken from my salary and i never thought about it.

Does anyone have any advice?

Thanks all,

Gordon.

jem16

Gordon_hutton wrote: »

Last year i got a tax bill for the 2007/2008 period where even though i am a paye employee the calculation was wrong based on my tax code being wrong.

You would need to give a lot more info than you have given for anyone to form an opinion and offer help.

Underpayments of £4.5k in one year is a pretty large amount. Can you give us your tax code used for the years in question? I would haxard a guess that it was perhaps a BR code and you were a higher rate taxpayer so it didn't take enough tax.

So can you provide;

Tax code for each year of underpayment
Gross taxable pay
Tax paid

Do you also know why your tax code was wrong? Did this problem arise when you changed jobs or anything similar?

Gordon_hutton

Hi,

Thanks for the response, I will get far more information when I get back home and dig out all the payslips etc.

The first 4.5K was due to a BR tax code issue I believe, and happened when I changed jobs. I was with the same company after that but we were aquired by a larger company and my tax code was wrong for all of that time apparently.

I really appreciate the help, it's a worrying time for sure.

Huge thanks,

Gordon.

luvsbargins

The previous reply has assumed you were higher rate but taxed on code BR (basic rate). If this is correct all your income has been taxed at basic rate of 20%, whereas on a 'normal' code you would receive some wage tax free, some taxed at 20% and some taxed at 40%. This is where the tax underpayment may have arisen.

HMRC expect people to check the tax code on payslips against what your code should be and let them know if the code is wrong so it can be updated, however there appears to be little education given to the general public about the basics of tax!

It appers you will not be able to claim 'official error'. Therefore I suggest you contact HMRC asap to arrange time to pay off the debt. Maybe over 3 years? Worth asking them. Good luck.

Gordon_hutton

In the first instance I absolutely understand.

If I was on a BR tax code I should have chased things through and not relied on my company to have a procedure to help me. My salary for that year was somewhere around the 70K mark so it makes sense.

Following that though it just seems unfair to me that I can be taxed at source with no liability to my employer or the tax office for errors. Then get a bill this big which spans errors for multiple tax years.

I can't give a bill to a customer, then charge them more two years later because I calculated their bill wrong and just say...well I told you that I was giving you x percent of discount, you should have checked.

Thats life though I guess.

Thanks again for the responses, they are really appreciated.

Gordon.

jem16

Gordon_hutton wrote: »

The first 4.5K was due to a BR tax code issue I believe, and happened when I changed jobs. I was with the same company after that but we were aquired by a larger company and my tax code was wrong for all of that time apparently.

When you first changed jobs, did you give your new employer a P45 or did you complete a P46?

Gordon_hutton wrote: »

Following that though it just seems unfair to me that I can be taxed at source with no liability to my employer or the tax office for errors.

What error do you believe happened? For your employer to use a BR tax code, one of 3 things happened.

1. You handed in your P45 which already had a BR tax code on it as your final tax code when leaving.
2. You completed a P46 and ticked Box C to say you had another job.
3. You did not hand in a P45 or complete a P46.

If none of the above took place, then you could consider employer error.

For an error from HMRC you would need to show that HMRC did not act upon information that should have seen a different tax code issued. Normally that would come from the P45 or P46 or you alerting them to an error.

Gordon_hutton

Hi there,

I have the following Tax information relation to Tax codes etc. After deeper investigation on what Tax codes actually mean I think this shows i was on an emergency tax code for over 3 years. I was with the same company for about 4.5 years in total. I have just paid the shortfall from the 2007/2008 year and the rest of my bill is for the following years:


from 09/2011 - 408LM1

from 04/2011 - 453L

from 12/2010 - 413L

from 04/2010 - 497L

before this BR



2009/2010 - BR

2008/2009 - BR

I just can't understand that if being on the right tax code is my responsibility then why it's not a standard to educate people of this. And if the employer has no liability then why include the employer in the tax process at all?

My understanding is that if put on an emergency tax code the employer should take action to get you off of it. And if HMRC spot you on an Emergency code at the start of a new tax period they should inform you and the employer to take action. If for some reason I missed this correspondence then both myself and the employer missed it, thats if it was ever sent at all.

I guess the question really is do I even bother to hire a tax specialist or just assume that the tax office makes the law and find a way to pay?

I really do appreciate your help with this jem16 and everyone.

Gordon.

chrismac1

Gordon, you make an excellent point I have made myself on this forum and others many times. Firstly it seems to me you have an ABOVE average capacity to understand all this stuff - yet you are still utterly baffled. This is not your fault.

Let's start with the basics - 810L is the tax code most PAYE folk are on - !!!!!!!!!!!

Utterly meaningless to well over 90% of the UK population is my guess. Why not at the very least have that code 8105 and then we can start the tax education process by the commonsense statement that the number in your tax code = tax free pay.

You are not alone. Various Tribunal judges and Adjudicators in their rulings have in effect agreed with you that even basic aspects of the UK tax code are too complex. They have done this by ruling in favour of the taxpayer and not buying in hook line and sinker to the pervasive HMRC view that every taxpayer has a duty to learn every single piece of tax code that affects them.

For example, in the HMRC every single UK taxpayer has a duty to know exactly when they become a higher rate taxpayer. Now we move from something 10% of the population can grasp to something 1% can grasp.

You need to know:

1. What your tax code means. 10% are now left in the hunt
2. Where higher rate tax begins - and it is 42,475 which means 5% fall at the second hurdle since most tax tables state the "basic rate band" as 35,000.
3. How to assess the tax impact of any benifits in kind or self-employments, so another 2% are out of the race here.
4. That some pension payments, all taxed interest and UK dividends must be "grossed up" to arrive at their impact on your taxable income.

That easily leaves just 1% of the UK population still standing. Yet the tax manual imposes this level of understanding on everyone. Bonkers!

CLAPTON

Gordon_hutton wrote: »

Hi there,

I have the following Tax information relation to Tax codes etc. After deeper investigation on what Tax codes actually mean I think this shows i was on an emergency tax code for over 3 years. I was with the same company for about 4.5 years in total. I have just paid the shortfall from the 2007/2008 year and the rest of my bill is for the following years:


from 09/2011 - 408LM1

from 04/2011 - 453L

from 12/2010 - 413L

from 04/2010 - 497L

before this BR



2009/2010 - BR

2008/2009 - BR

I just can't understand that if being on the right tax code is my responsibility then why it's not a standard to educate people of this. And if the employer has no liability then why include the employer in the tax process at all?

My understanding is that if put on an emergency tax code the employer should take action to get you off of it. And if HMRC spot you on an Emergency code at the start of a new tax period they should inform you and the employer to take action. If for some reason I missed this correspondence then both myself and the employer missed it, thats if it was ever sent at all.

I guess the question really is do I even bother to hire a tax specialist or just assume that the tax office makes the law and find a way to pay?

I really do appreciate your help with this jem16 and everyone.

Gordon.

just for the record your understanding of the employer's duty is 100% incorrect

When you join a company their duty is to look at your P45 and apply that code or look at the info you supplied with your P46.

thereafter their duty is to do whatever HMRC tell them to; no more no less.

System

chrismac1 wrote: »

For example, in the HMRC every single UK taxpayer has a duty to know exactly when they become a higher rate taxpayer.

Where did you get that from?.I couldn't find a single leaflet or manual entry that describes that duty

Of course I could be wrong.

antonic

ceiberman wrote: »

Where did you get that from?.I couldn't find a single leaflet or manual entry that describes that duty

Of course I could be wrong.

I very much doubt it, but if Chrismac1 says so it must be true ....:rotfl: