I am PAYE with a tax shortfall of 16K

elmer

Oh joy Im in the top 1% of the population

But actually probably not!

elmer

holly_hobby

Ultimately the view of HMRC, is that it is responsibility of the indvidual to ensure they are being taxed under the correct tax code.

Unfortunately, (or fortuantely for you at the time), for the past several yrs you have not been paying the appropriate amount of tax due to the revenue. Now discovered, HMRC don't care on the mechanics of how this mess up happened (as it wasn't an error on their part, and they aren't classing it as tax avoidance), as a result of which they just want paying - and there is no escape ! So arranging a repayment schedule (which may also involve an amendement (reduction) to your tax code is your main priority with them.

A sep issue is the alleged b*lls up by your payroll/hr dept - which you may want to take up directly with them (i.e - have them absorb any interest HMRC may charge on the os sum). However be prepared for they to throw the responsibility of checking your correct tax code was being applied, back to yourself - but its worth a punt if you get them to absorb any levied penalty fees/interest.

Hope this helps

Holly

jem16

Gordon_hutton wrote: »

After deeper investigation on what Tax codes actually mean I think this shows i was on an emergency tax code for over 3 years.

None of the codes you have posted are emergency tax codes. The emergency tax code is usually the personal allowance for that tax year used on a non-cumulative basis.

http://www.hmrc.gov.uk/incometax/emergency-code.htm

None of your tax codes fit that description.

I am assuming you are referring to the BR tax code as an emergency tax code but it is not. It is a code that is used for either a 2nd income or in the absence of a P45 or P46.

My understanding is that if put on an emergency tax code the employer should take action to get you off of it.

As already said, your understanding of this is totally incorrect. Your employer does not know all your circumstances and has no way of knowing whether or not your tax code is correct or incorrect. Only you and HMRC have that information.

Your employer's job is to utilise your P45 details or ask you to complete a P46 in the absence of the P45. As yet you have not answered my question about the P45/P46 situation on starting your new job so we have no way of knowing if there has been any employer error or not.

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.

You haven't been on an emergency tax though.

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?

The first thing you need to do is tell us about the P45/P46 on changing jobs. If there was a P45, what tax code was on it?

chrismac1

"If your circumstances change"

If you don't complete a tax return but your circumstances change, you still need to tell HMRC. You must tell HMRC, even if you don’t think you need to complete a tax return. HMRC will decide if you need a tax return or if you can pay the tax due in some other way instead.
For example, you may owe tax as:

• you pay tax at the higher rate on your earnings and have investment income that needs to be taxed at the higher rate."

The above is from the HMRC website. In order to know whether you need to declare higher rate tax on your earnings, by definition you need to know where higher rate tax begins.


This is not a hypothetical point. I have two separate clients who were in exactly this position, where HMRC made it abundantly clear that they expected them to know they were higher rate taxpayers. One I got off under Esc A19, one HMRC raised "calculations" about 2 or 3 years ago and then seem to have forgotten to do anything about it.


In each case the tax involved was over £3k.

antonic

Mind you there wont be this problem in the future when RTI goes live.

chrismac1

In theory you are right, let's hope not. Right now it was 2 years and 4 years respectively in these cases before HMRC got off their fat asses and raised "calculations" or assessments. I have a foreboding that RTI is going to knock the HMRC computer for 6 and hence things will get worse before they get better.

Gordon_hutton

Thanks again all.

So my understanding is:

HMRC is incapable of knowing how much tax you should pay but will tax you and penalise you if it is found to be wrong.

Your employer has no liability in anything to do with Tax and will just do what they are told regardless.

So why are we not all responsible for our own tax, high, low or otherwise?

It just seems that PAYE is a complete and total waste of time for all involved. I wonder how many like myself are in the system and will never be investigated....thats a huge amount of revenue this country is losing because of the incompetence of our tax office and our tax policies.

I am in the US right now so don't have all of my documents to hand but will update with the initial question about my previous employer and the tax code on my P45 when I get back from here. I'm working in California right now.

If nothing else this is a really interesting discussion.

Thanks all,

Gordon.

jem16

Gordon_hutton wrote: »

HMRC is incapable of knowing how much tax you should pay but will tax you and penalise you if it is found to be wrong.

You seem to be picking out bits to support your theory that someone, other than you, must be wrong. This may be the case, but it may not be.

With the correct information, HMRC will tax you correctly. However they rely on getting that correct information from you and employers/pension providers etc.

Your employer has no liability in anything to do with Tax and will just do what they are told regardless.

If your employer has made an error, they are liable. If they have followed all the correct procedures, then they are not.

So why are we not all responsible for our own tax, high, low or otherwise?

You are responsible for providing the necessary information from which your tax can be calculated correctly. This is especially important on changing jobs.

It just seems that PAYE is a complete and total waste of time for all involved. I wonder how many like myself are in the system and will never be investigated....thats a huge amount of revenue this country is losing because of the incompetence of our tax office and our tax policies.

At the moment, we don't know who has been incompetent. It may have been your employer, HMRC or even yourself.

holly_hobby

Gordon_hutton wrote: »

So my understanding is:

HMRC is incapable of knowing how much tax you should pay but will tax you and penalise you if it is found to be wrong.

Tax is deducted at source by your payroll dept - it is easy to check your basic tax code, which may be amended by any BIK arrangements - of which you will know what should or shouldn't be applied.

Payroll directly pay the deducted tax to HMRC, based on the correct tax code being applied.

It is established that you haven't paid sufficient tax (only being taxed at 20% instead of 40%) - but is the real purpose of your post being that you don't believe you should pay it all ?

Gordon_hutton wrote: »

Your employer has no liability in anything to do with Tax and will just do what they are told regardless.

They facilitate payment of tax/nic application and payment to HMRC - they can and do get it wrong (which is why you always need to check your payslips re correct info ie tax code and NI number is recorded).

Gordon_hutton wrote: »

So why are we not all responsible for our own tax, high, low or otherwise?

It just seems that PAYE is a complete and total waste of time for all involved. I wonder how many like myself are in the system and will never be investigated....thats a huge amount of revenue this country is losing because of the incompetence of our tax office and our tax policies.

Yes, but the c*ck up is not HMRCs its between you and your payroll dept - and doesn't alter the fact that you have benefited from not paying tax where it was due and is owed.

I appreciate that its not an ideal situation, but lets swing it round for a clearer view ... how would you feel if you had the correct correct tax deducted at source, yet discovered that your fellow colleague on the same salary and situ, paid 20% less tax than the should .... would you believe it appropriate for them to attempt to avoid paying it at all (no matter whether the error was theirs or that of payroll ?) ....

The tax is due, it needs paying, it won't be avoided, its (at best) payrolls error (facilitated by your omission of verifying all deductions etc were correct), whom may agree to absorb any penalties or interest if you push it with them (but don't bank on it).

Hope this helps

Holly

jem16

holly_hobby wrote: »

Yes, but the c*ck up is not HMRCs its between you and your payroll dept

What information has the OP provided to allow you to decide where the fault lies?

its (at best) payrolls error (facilitated by your omission of verifying all deductions etc were correct), whom may agree to absorb any penalties or interest if you push it with them (but don't bank on it).

Hope this helps

Holly

The company may have done everything correctly. Why should they absorb any penalties or interest if it hasn't been their error?