HMRC wants money from me!

djcat

Good evening,

fighting with the HMRC, they sent me a letter five months ago telling me I underpaid by nearly a thousand pounds in tax year 2010/2011. I changed jobs in October 2010 and my former employer sent them the P14 on April 2011. Citing their last letter:

"As this included your leaving date, we then had 12 months from 5 April 2012 in which to issue you with a tax code or a calculation. A calculation was issue to you on the 29 June 2012".

I am very surprised by the length of time
A) my employer took to tell them I left
HMRC took to issue the calculation given that of course I handed in a P45 to my new employer and
C) HMRC apparently has to come back to me!

Given the fact that HMRC has 12 months after the end of the tax year, it is a domino effect based on the date my former employer handed in the P14. My questions are: Is this sequence of events right? How long does an employer have to hand that P14 in and does HMRC have 12 months from 5 April 2012 as they say in their letter or from 5 April 2011? Should HMRC have acted upon my P45 or only upon the P14? If the revenue service is right, does my former employer have any responsibility in this matter as they took half a year to send the P14?

Thanks for your help, much appreciated!

ctm_2

P14's are submitted after the end of the year, so your previous employer has done this right.

We need more details to figure out why you underpaid before we can comment on anything else.

You say you handed your P45 from one employer to the next, so things should have worked properly. You don't mention if you had any company benefits (company car, medical insurance etc) with either employer.

Also, you will need to let us know how much the underpayment is, and the P45 and P60 details.

elmerfudd_2

Employers have to submit a P14 by 19th of May.

You don't really indicate the cause of this underpayment apart from the fact you changed jobs, going by that alone the casue may have been duplicate/too much tax free allowances, ie both your employers paid you entirely seperately and both gave you the tax free allowance for the year, or part of it.

back_against_the_wall

Not quite sure what is going on here. When you changed jobs your last employer should have given you a P45, with your previous pay and tax details and the tax code in operation at the time, to hand in to your new employer. This would enable your new employer to continue making the correct PAYE deductions from your pay from when you started your new job. This has nothing to do with P14s submitted after the end of the year. HMRC do not act on your P45, your new employer does when you start work. If there has been an under deduction because your new employer has failed to take into account the figures for previous pay and tax on your P45, and the tax code on the P45, HMRC should write to the employer for an explanation of the under deduction before sending you a tax calculation. This is because under the PAYE regulations the employer is first liable for any under deduction arising from their failure to operate PAYE correctly. Only if HMRC are satisfied that the PAYE error was made in good faith by your employer are they allowed to collect the under payment from the employee. In practice, these days, HMRC can't be bothered making enquiries to employers. They just churn out computer generated tax calculations because this can be done at the touch of a button without much trouble, and then just hope you pay up. An under deduction of nearly £1000 is certainly worth questioning as it is unlikely to be your fault, assuming you handed in your P45 with your previous pay and tax details. Hope this helps.

System

back_against_the_wall wrote: »

In practice, these days, HMRC can't be bothered making enquiries to employers. They just churn out computer generated tax calculations because this can be done at the touch of a button without much trouble, and then just hope you pay up. An under deduction of nearly £1000 is certainly worth questioning as it is unlikely to be your fault, assuming you handed in your P45 with your previous pay and tax details. Hope this helps.

As I understand it, there's not even a 'touch of a button' any more. It's automated P14 in > Calculation out. I don't think the PAYE regulations specifically preclude issuing a calculation even if there has been an employer error - this wouldn't necessarily be identifiable from the P14 in isolation. But as you say, if there has been employer error, this should be investigated before HMRC try to start collecting the tax.

I'm not sure HMRC's hope is that taxpayers just pay up. The new notes sent with the calculations invite taxpayers to contact HMRC if they suspect employer error. If the OP can't see any obvious reason for the under deduction then it's best they contact HMRC. Until the cause is established any advice is just speculative.

chrismac1

Yes you are correct OP - HMRC has ages to raise these assessments. However, many of them are just plain wrong and yours could be one of these so post up the details.

The computer is indeed just set to spit out assessments - even very silly ones doubling or tripling income, you don't have to look far on this site to find examples - with no proper sense checking either by computer or by exception report and manual review.

Our tax system is a shambles, it was considerably better say 30 years ago for example. DO NOT JUST PAY UP. This is of course exactly what they want, hence the scary language which normally accompanies these.

If anyone else sent you a £1k bill 12 months late, would you just pay up? Suppose your electricity company sent you a letter saying "Sorry mate your meter wasn't wokring 2 years ago, you owe us an extra £1k."

So at the very least you should find out exactly how this happened and whether indeed the HMRC abacus has got its sums right, as all too often a grain of sand stops the beads from sliding properly on it.

Then, and only then, if it is right you need to cough up.

System

chrismac1 wrote: »

So at the very least you should find out exactly how this happened and whether indeed the HMRC abacus has got its sums right

I'd agree with chrismac1 on this one point. It's important to get to the bottom of the cause of the underpayment.

If you don't feel comfortable posting details here are a few basic checks you can carry out.

Get you P60 and P45(part 1a) from your former employer.

1) add together the figures for 'pay in this employment' from P45 and P60.

2) do the same thing for 'tax paid in this employment'

3) compare these with the figures shown on the P800 tax calculation.

You mention that you passed your P45 to your normal employer. In which case I'd expect your P60 to show at least two sets of figures. Pay/Tax in this employment (new employer) and Previous Pay/Tax (first employer).

Do the 'Previous Pay/Tax' match the figures shown on your P45? Has the new employer used the tax code shown on your P45.

If none of this sheds any light on what happened ask HMRC to explain the underpayment.