Stung by employer, Please help...

smcdougall1980

My partner has for the last approx 6 years had two employers her main fulltime positio nand a part-time evening care job with a local residentail home. It has transpired that the care home (2nd employer) hasnt allocated the correct tax code. Evidently this has meant for the duration of employment not enough tax contributions have been allocated. This has never been picked up before!!!
As it turns out the Tax Office have taken the full amount owed in 1 sum from the care home and the care home has since said to my partner that she is now expected to work the next 'several months' unpaid to clear what is owed. The reaqlly annoying aspect is that today is her payday and this is the first she has known about it after checking with the bank, seeing no funds and contacting the employer.
Any assistace would be great...

bluenoseam

This sounds dodgy as hell, you need to get in touch with your local tax office as well as HR if they exist - if anything it's their mistake and they should also have offered means to pay it over time!

pinkteapot

Suggest this thread gets moved to the Cutting Tax board, as there are more tax experts over there.

However, something isn't right here. If you have underpaid income tax, HMRC write to you (not your employer) and tell you. It is then either clawed back through a change in your tax code (which means you pay more tax per month) or they demand a lump sum.

They don't "take" the money from the employer.

If she hasn't received anything from HMRC, the first thing to do is phone them and find out exactly how much is owed. She'll need her coding notices and other tax info for the years in question.

When you say that the employer hasn't allocated the correct tax code, what do you mean by the way? Employers don't decide your tax code - HMRC do. They advise your employer of what your tax code is and your employer uses that one. Did the tax code on her pay slips match what HMRC wrote and told her that her tax code was? If so, the employer did use the correct code as provided by HMRC. If not, it was an employer error as they didn't use the code that HMRC told them to.

smcdougall1980

Many thanks Bluenoseam, I know there is no 'official' HR dept so im hoping the correct route is through the employers of the home.

smcdougall1980

Hi Pinkteapot, Youve kind of hit the nail on the head we recivied a letter about 4 weeks ago which outlined under payment dating back to 2006/2007 tax year. We contacted the tax office and they said they would send a letter with the calculations of how much has been underpaid. The employer also recivied a letter stating that underpayment had occurred and this can be rectified by the employer paying, if they are at fault!

pinkteapot

OK, that's a bit clearer now. I would assume that HMRC's letter to the employer was intended to mean that if the employer was at fault, they can pay as a goodwill gesture to save the employee paying.

It absolutely does not mean that the employer should pay it without consulting the employee about repayment terms. If the employer decided it wasn't their error and that the employee should pay as normal, then it would have been much better for your other half to sort it out with HMRC directly. As I said, they can either take it through your tax code (effectively in monthly installments) or, if the amount is too high, ask for a lump sum. However, with lump sum demands HMRC have a 'time to pay' helpline and you can arrange interest-free installments if you can't pay the lump sum.

Given that it appears the employer has taken it upon themselves to "lend" your other half the money, without consulting her, the situation is far more messy. They are obviously in the wrong as they didn't ask her if it was OK or what repayment terms she could meet. Given that there is no sort of repayment agreement between your other half and the employer, I don't see what's to stop her quitting the job!

I think that all she can do is talk to the employer about repaying the money but I'd be p***ed as hell if my employer decided to kindly lend me money without my knowledge then insist I work for free until it was repaid!

mariefab

Some info here:

http://www.hmrc.gov.uk/paye/payroll/day-to-day/errors-previous-year.htm

Mistral001

pinkteapot wrote: »

They don't "take" the money from the employer.

Do they not?

Employers have to pay HMRC every month (or quarter depending on the size of the firm) the total income tax deducted from employees for that month. In this case they will be getting a bigger bill unless HMRC has got it wrong here. The OP could ask when the money will be taken by HMRC from the employer. If it is not until the end of the financial year (April next year) then there is no reason as far as I can see why it has to come off the OP's paypacket now but spread out over a much longer period.

patman99

So what would happen if your oh was to quit the job and go work elsewhere ?. By doing what they have done, the care home has opened itself up to a huge risk.

pinkteapot

Mistral001 wrote: »

Do they not?

Employers have to pay HMRC every month (or quarter depending on the size of the firm) the total income tax deducted from employees for that month. In this case they will be getting a bigger bill unless HMRC has got it wrong here. The OP could ask when the money will be taken by HMRC from the employer. If it is not until the end of the financial year (April next year) then there is no reason as far as I can see why it has to come off the OP's paypacket now but spread out over a much longer period.

Employers do of course deduct your monthly tax and pass it on to HMRC. But, if someone has underpaid tax, HMRC won't send a demand for a full lump sum repayment to the employer.

If it's going to be recouped through the employee's tax code, HMRC will send the employer the new tax code to use, from which point the employee's monthly tax paid will increase. If it's going to be repaid as a lump sum, the employee usually makes a payment directly to HMRC.

As I said earlier, my assumption would be that HMRC's letter to the employer in this case was advising them of the underpayment and offering them the opportunity to pay instead of the employee, if it was a mistake on the part of the employer. What the employer in question is done is effectively extend a loan to one of their employees without asking the employee if that's OK or discussing how it will be repaid.

However, also as mentioned as earlier I think this thread needs to be moved to the Cutting Tax board as there are people over there who are far more expert on the workings of HMRC than me.

Mistral001

pinkteapot wrote: »

Employers do of course deduct your monthly tax and pass it on to HMRC. But, if someone has underpaid tax, HMRC won't send a demand for a full lump sum repayment to the employer.

If it's going to be recouped through the employee's tax code, HMRC will send the employer the new tax code to use, from which point the employee's monthly tax paid will increase. If it's going to be repaid as a lump sum, the employee usually makes a payment directly to HMRC.

As I said earlier, my assumption would be that HMRC's letter to the employer in this case was advising them of the underpayment and offering them the opportunity to pay instead of the employee, if it was a mistake on the part of the employer. What the employer in question is done is effectively extend a loan to one of their employees without asking the employee if that's OK or discussing how it will be repaid.

However, also as mentioned as earlier I think this thread needs to be moved to the Cutting Tax board as there are people over there who are far more expert on the workings of HMRC than me.

I see so the OP has the options of either having a temporary change in tax code until the tax owed is paid off or to pay a lump sum. The employer has panicked and assumed that they have to pay a lump some to HMRC and there is no temporary tax code change option.