Husband has received letter saying he owes tax man more money

gothicgal

Hi, I'm wondering if anyone here can help me. My husband has received a letter saying that he owes the tax man more money. He has always been employed and never self employed.

Following advice found here on the forums, we wrote back saying that we believed that he had paid the correct tax as he has always been employed and that they should go back to previous employers for the tax owed (we found a template letter and followed that).

We've received a letter back from the tax man saying that they had checked with the previous employers and that my husband did indeed still owe the tax based on medical insurance benefits that he had received. Further, it was our responsibility to make sure that our tax codes were correct!

As my husband has always been employed, I don't understand how his employers could have failed to declare that my husband was in receipt of medical benefits. As it is, it looks like he is being asked to pay tax on medical benefits for a year when he was only with the company for 4 months.

Any advice is gratefully received.

Thank you!

twig1_2

When did he leave the company where he had undeclared medical insurance. The benefit in kind declarations are sent to HMRC at the end of the tax year .

gothicgal wrote: »

Hi, I'm wondering if anyone here can help me. My husband has received a letter saying that he owes the tax man more money. He has always been employed and never self employed.

Following advice found here on the forums, we wrote back saying that we believed that he had paid the correct tax as he has always been employed and that they should go back to previous employers for the tax owed (we found a template letter and followed that).

We've received a letter back from the tax man saying that they had checked with the previous employers and that my husband did indeed still owe the tax based on medical insurance benefits that he had received. Further, it was our responsibility to make sure that our tax codes were correct!

As my husband has always been employed, I don't understand how his employers could have failed to declare that my husband was in receipt of medical benefits. As it is, it looks like he is being asked to pay tax on medical benefits for a year when he was only with the company for 4 months.

Any advice is gratefully received.

Thank you!

gothicgal

Hi,

Thanks for the swift reply. I should have been more clear, they say he was in receipt of medical expenses but say he had them for a year when he was only there for 4 months so we don't understand how he can possibly owe money.

Thanks,

somethingcorporate

Well if his tax code was never adjusted to take account of his medical benefits then he will owe the money.

I work for a massive company with thousands that have health benefit - for some reason I slipped through the net and it was not added to my tax code for a year or two. I fessed up and had to have a catch up in my tax code for the next year to make up for it.

If it's due, it is due. Although can you not just ask them to phase it over the next year in his tax code? you wouldn't feel a thing. My benefit is worth £1000 pa and as a 40% taxpayer it costs me £35 a month so the most they are likely to be asking for is £160 or so, which would be £16 a month from his pay of half that if he is a 20% payer.

twig1_2

Don't understand what you mean in receipt of medical expenses if it is not Health Insurance. All insurance is taken out for a year so that maybe why he is being declared it for a year would
have thought it could have been cancelled by the company though. Maybe next port of call is a call to the company he worked for and find out why they have declared a whole year and when they declared it.

gothicgal wrote: »

Hi,

Thanks for the swift reply. I should have been more clear, they say he was in receipt of medical expenses but say he had them for a year when he was only there for 4 months so we don't understand how he can possibly owe money.

Thanks,

gothicgal

twig1 wrote: »

Don't understand what you mean in receipt of medical expenses if it is not Health Insurance. All insurance is taken out for a year so that maybe why he is being declared it for a year would
have thought it could have been cancelled by the company though. Maybe next port of call is a call to the company he worked for and find out why they have declared a whole year and when they declared it.

Sorry, I meant medical benefit (am typing this in work so have to be careful who is looking over my shoulder!!). They are wanting £815 in unpaid tax - considering he was only there for 4 months, that's a lot of money for medical benefit.

twig1_2

That is a lot are you sure that is not the value of the benefit ie the amount the company paid for the medical benefit. You should pay either 20% basic rate tax or 40-50% if higher rate tax payer of the £815. Usually this is taken along with present tax by adjusting the tax coding so if you have the usual personal allowance the full benefit amount will be deducted from it.
Did your husband not know he was getting medical benefits . It should have been in his contract of employment. I would still consider phoning the ex employer to see why the full amount was included maybe the case of an inexperienced payee clerk putting the wrong amount. Did they tell you that you were still covered I don't think this usual.

gothicgal wrote: »

Sorry, I meant medical benefit (am typing this in work so have to be careful who is looking over my shoulder!!). They are wanting £815 in unpaid tax - considering he was only there for 4 months, that's a lot of money for medical benefit.

missile

£815 in unpaid tax equates to £4075 in undeclared taxable benefit for a basic rate tax payer. That would appear to be far more than one years medical insurance. I suspect there is more to this than you know or are saying.

They should have sent him an assessment along with their demand for unpaid tax. You, or rather your husband need to check this carefully.

gothicgal

@twig1 - he knew he was getting medical benefits. He gets a letter every year telling him what his tax code is and how it is calculated. That is why we don't understand why the big tax bill now.

When we queried why his tax allowance was so low, he was told it had to do with medical benefits from his previous employment. We spoke to his previous employer and they've admitted that it was a mistake. We've given the tax man a copy of his P60(?) and they still claim this is the correct amount of tax. The letter from Inland Revenue states quite clearly that the money owed is due to the medical benefits. I don't have the letter here so I can't tell you the precise wording.

@missile, I've come here asking for help so why would I lie? we received no assessment. This is based purely on the P60 we provided when we queried why his tax allowance was so low

twig1_2

I think there is definatly a mistake somewhere. £4000+ premium for medical insurance is too high as even if your husband was high risk/pensioner age the insurance premium on a employer group policy would not be so high.
When you are able to get the letter and the new coding they will have issued we maybe able to work out who has made the mistake.
The ex employer should be able to send a corrected return to HMRC if it is them. The employer should have issued a p11d to your husband which should show the value of all the benefits iin kind that he received whilst working for them . They should send this even if your husband is no longer working for them as this makes up the detail of the form they declare to the revenue. When the ex employer admitted it was a mistake what do you understand they meant?

gothicgal wrote: »

@twig1 - he knew he was getting medical benefits. He gets a letter every year telling him what his tax code is and how it is calculated. That is why we don't understand why the big tax bill now.

When we queried why his tax allowance was so low, he was told it had to do with medical benefits from his previous employment. We spoke to his previous employer and they've admitted that it was a mistake. We've given the tax man a copy of his P60(?) and they still claim this is the correct amount of tax. The letter from Inland Revenue states quite clearly that the money owed is due to the medical benefits. I don't have the letter here so I can't tell you the precise wording.

@missile, I've come here asking for help so why would I lie? we received no assessment. This is based purely on the P60 we provided when we queried why his tax allowance was so low

dori2o

From the way this post has been going I'm going to assume he was employed by this employer, and then left 4 months into the tax year.

If this is the case, then the value of the medical insurance will be dependant on how much the employer pid for this benefit. Just because they left the employer after 4 month of the tax year it does not necessarily mean thet the medical benefit should be apportioned to the same period.

It is not uncommon for the employer to pay for a full years benefit (i.e they pay for it in a lump sum rather than on a monthly basis), even if the employee leaves that company part way through the year. It just means that the employee would have access to the medical insurance until the renewal date for the insurance. (This would also be the case if you started with an employer part way through the year. For example You start employment in June, you employer pays for the medical insurance in one lump sum in December of each year, you would be charged the whole years benefit charge as this is what the employer has paid).

You say you have sent a copy of the P60 to HMRC, have you also sent them a copy of your husbands P11d for that year?

The P60 will only tell HMRC how much salary yopur husband received and how much tax he paid, the P11d will detail the 'cost' of the benefits the employer paid for on your husbands behalf.

If you don't have a copy of that P11d you will need to contact the employer and ask them for a copy. They should have issued one to him regardless of whether he was still employed with the company at 5 April of the year in question.

If you disagree with the figures on the P11d, then you will need to speak to the employer as HMRC will always accept the information given to them by the employer even if it is incorrect. If you and the employer agree the figure on the P11d for medical benefit is wrong, then the employer would have to submit an amended P11d to yourselves and HMRC so that the assessment can be recalculated using the correct figures.

The figure does seem quite high for just 1 years medical insurance, does the calculation you have refer to underpaid tax carried forwards from eralier years?