Stung by employer, Please help...

pinkteapot

Yes, if HMRC write to you (the employee) and say you've underpaid, you can either have a change in your tax code to repay the money or pay them a lump sum. If the underpayment is more than a certain amount (I think its £2,000), they won't give you the tax code option and you have to just pay up. They ask for a lump sum but they have a helpline for people who can't afford it and will set up interest-free installments for you.

This is all something that's done directly between employees and HMRC. If you end up repaying through a tax code change, HMRC notify your employer of your new tax code and they have to change it on their payroll system so that the correct (higher) tax is deducted.

Yes - sounds like the employer has panicked and paid it. They should only have paid it if it was their error and they decided to pay the bill as a goodwill gesture, so that the employee wouldn't have to.

OP - has your other half spoken to her employer yet? It's ridiculous that they've set up this loan (it's what it is!) without consulting her.

jobbingmusician

Moving it to the Cutting Tax board sounds sensible to me. I suggest that in the mean time you ring ACAS and/or take advice from the CAB, as I'm certain they are not entitled to suddenly withold your wages!


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patanne

It sounds like HMRC has written to the employer & told them the underpayment is THEIR responsibility as they have not been using the code provided by HMRC. That is the only reason the employer would know anything about the underpayment as your tax affairs are not normally any of the employer's business. I would suggest ringing HMRC and asking them or asking for copies of paperwork from the employer which has authorised the deduction (I think they will be unable to do that). I suspect that the employer has just got themselves into more trouble with HMRC! They should still have done a payslip showing deductions of tax NI etc.

zzzLazyDaisy

pinkteapot wrote: »

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.

There are limited circumstances where, if the employer is at fault the employer - not the employee - is legally liable for the payment of the underpaid tax.

http://www.hmrc.gov.uk/thelibrary/tax-paye/employer-errors-deduction-paye.pdf

It is entirely possible that HMRC wrote to the employer to establish the reason for the unpaid tax, and explained that should they be found to be at fault they may be liable for the repayment. It seems that the employer responded to this by paying the bill and is now looking to recover that money from the employee.

It may well be the case that in making the payment, the employer has admitted liability, and forfeited the right to reclaim the money from the employee (I have known this happen on a severance payment where the employer failed through its own incompetence to deduct tax and made a lump sum payment tax free, when they were fully aware that it should have been taxable. The employer in that case was responsible for paying the tax and had no legal right to recover the money from the employee).

So I think, as the employee, my first port of call would be to contact HMRC and find out on what terms the employer made the payment, and whether the payment is recoverable from the employee.