I am PAYE with a tax shortfall of 16K

Gordon_hutton

Ultimately I think one thing is very clear.

I am completely ignorant of what I should or should not be doing regarding Tax. I simply and perhaps stupidly trusted that it is all being dealt with by somebody else and therefore not really worry about what is deducted from my salary. I know this is now very very wrong and I was an idiot for expecting this to be taken care of.

I absolutely get it that Tax needs to be fairly applied to all and realise that I have not paid enough tax over the years. It just leaves me feeling quite sick at the thought that this could have been happening my entire working life and one day HMRC could (in theory) say 'Gordon you owe us 50K in miscalculated tax.' I understand it would be my responsibility to pay but am surely justified in feeling aggrieved.

In my opinion if the company did nothing at all and I calculated my own tax then happy days....i would feel far more capable of accepting that the tax was calculated by me therefore my fault.

I am babbling a bit now I know so sorry about that.

Ultimately I am ashamed of my ignorance about tax and angry at myself for not spending my time focussing on it and learning tax codes and tax liability in order to avoid this kind of situation.

It seems being ignorant and honest gets you absolutely nowhere. I do accept that this is my fault and I accepted a free loan that I didn't ask for but didn't check i wasn't getting.

it's just upsetting when you have faith in a system that turns out to be a silly thing to do.

Gordon.

holly_hobby

jem16 wrote: »

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

Becuase he hasn't paid the correct tax because of the apparent application at source, of an incorrect tax code (notwithstanding that checking its accuracy is ultimately the responsibility of the individual, via verifying details noted on their P60 and each payslip).

Furthermore HMRC are apparently not at fault, unless in possession of correct personal data supplied by the OP, they provided an incorrect tax code - which from the OPs comments doesn't appear to be the case.

Thats what my comments are based on.

jem16 wrote: »

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

I did say if it WAS their error (despite the OP indirectly assisting by not checking the accuracy of tax paid/tax code application)that they may wish to do this as a gesture of good will to their employee.

Of course if its not their error, and we know its not HMRCs, then we are back to sqaure one, its the OPs and he's on his own.

Holly

jem16

holly_hobby wrote: »

Becuase he hasn't paid the correct tax because of the apparent application at source, of an incorrect tax code

The correct tax code may have been applied by the employer if;

1. The BR tax code was the leaving code on the P45.
2. There was no P45 and a P46 was completed(incorrectly) with Box C ticked.
3. No P45 was given and no P46 was completed.

All we can work out from the OP is that the BR code was wrong in his new circumstances. However there is nothing to tell us that the code was applied incorrectly as yet.

System

chrismac1 wrote: »

"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....

1) it's a bit of a leap from HMRC explaining taxpayers have a duty to report a change of circumstances to all taxpayers having a duty to know where the HR tax band starts . If you read your post again you'll see that it instructs taxpayers to report the change. HMRC will let them know if there's HR tax to pay.

2) with A19 it's all about context. For example your client might have received a P2 coding notice for the year in question. They wouldn't have a duty to know the HR band it would be printed on the coding notice for them.

holly_hobby

jem16 wrote: »

The correct tax code may have been applied by the employer if;

1. The BR tax code was the leaving code on the P45.
2. There was no P45 and a P46 was completed(incorrectly) with Box C ticked.
3. No P45 was given and no P46 was completed.

All we can work out from the OP is that the BR code was wrong in his new circumstances. However there is nothing to tell us that the code was applied incorrectly as yet.

The glaring issue is the OP has an os tax debt, HMRC claim as a result of insufficient PAYE deductions - ultimately if this is as a result of the application of an incorrect tax code at source (as the OP alleges), then this is the action of the employer, but (as I stated in my first post) this is ulitmately the responsbility of the OP - and he really can't expect to evade or reason away the debt as the responsibility of someone else.

The bottom line of who is at fault between the OP, employer or HMRC is largely irrelevant re the relevance of the debt - the OP has paid insufficient tax and it needs to be satisfied.

If the error is determined as being the fault of HMRC, or the employer - HMRC may be much more agreeable to staged payments/payment by source via tax code adjustment, as oppossed to demanding the full amount if larger lump sums.

Its an unfortunate situ for the OP, but whilst he has recd a shock HMRC bill, he must realise that these are monies that actually have always been due to HMRC, they just weren't paid when they should have been ...

Hope this helps OP .... good luck to sorting this out into manageable bits ... !!

Holly x

chrismac1

With all respect it is no sort of a leap at all. In one of the cases I dealt with, it was a one-off share dividend which took the taxpayer into higher rate tax the first time when the tax credit was added. Ask yourself this:

"What % of the UK population would know this was a reportable change in circumstances?"

This thread arose because a - in my view - decent, honest UK taxpayer did not fully realise his responsibilities under the UK tax code. This led to a staggering £16k tax bill from PAYE. In the formal response to HMRC on their latest "Esc A19 fiddle attempt", I - along with many other accountants, have said:

"If the end of year payroll submissions every employer must submit by 19 May do not count as information, why on Earth should we bother submitting them?"

To me Gordon has the right to ask similar questions of HMRC. What the Hell have they been doing with all the information they've had about this situation over the past 5 years? It's just not good enough.

In a nutshell we have a 2 marks out of 10 tax service in this country.

Gordon_hutton

Hi all,

To add insult to injury I have been asked by HMRC to provide a breakdown of how much National Insurance I have paid over the period.

If they don't know who the heck does?

I think my only real option here is to get a lawyer with expertise in dealing with these cases. It appears that HMRC has a backlog of over 20,000 such cases, which is shocking in itself.

Thanks all,

Gordon. (The OP)

System

chrismac1 wrote: »

In the formal response to HMRC on their latest "Esc A19 fiddle attempt", I - along with many other accountants, have said:

"If the end of year payroll submissions every employer must submit by 19 May do not count as information, why on Earth should we bother submitting them?"

I'm not entirely sure that you've fully grasped the current ESC A19. The part about employers says:

An employer, if the information affects a taxpayer's coding.

How does a document issued between 6 April - 19 May affect a tax code for a year ended 5 April?

I think it's fair to say HMRC should be quicker getting calculations out after year end but even here Parliament's intention is quite clear. TMA 1970 giving 4 years to do that.

Again, a purely personal opinion, but id be very surprised if P14s weren't phased out if/when RTI beds in.

System

Gordon_hutton wrote: »

Hi all,

To add insult to injury I have been asked by HMRC to provide a breakdown of how much National Insurance I have paid over the period.

If they don't know who the heck does?

I think my only real option here is to get a lawyer with expertise in dealing with these cases. It appears that HMRC has a backlog of over 20,000 such cases, which is shocking in itself.

Thanks all,

Gordon. (The OP)

Hi Gordon

First off, hope you get things sorted.

As for the NI info you need, when you say breakdown have they asked month by month breakdown or just the annual figures? If it's the latter
this might/should usually be on your P60s. If you don't have them your employer should be able to give you copies.

chrismac1

Of course I have grasped what the esc A19 rules are. They stink. They are already loaded in HMRC's favour, and I say that as someone with a 90% plus record of winning Esc A19 cases and compensation arising.

But they have been shelling out a lot in such cases. Any decent tax service would sort out the root cause which is their own silly procedures and way of operating them. But no, not HMRC. Instead they attempt to move the goalposts still further in favour of themselves.

All I ask of them is consistency. If end of year payroll submissions are not information that is fine and dandy with me. I can go on holiday in May instead of sorting them all out for the country. Employers up and down the country can save a bundle by not having to submit them and having nothing to do with RTI.

Productivity would increase and so would GDP, this could be a recession buster!