HMRC - Notice of Tax Underpayment

bfgun

Hi,

I recently received a letter from HMRC which states that I have underpaid tax to the sum of £3K between tax years 2010-2011 & 2011-2012.

I am an employee with no outside income earning interests for which I would be responsible for paying tax on so whatever I earn and the benefits I have such as company car and health care would all be declared and known about.

I am aware that many people have been subject of similar miscalculations but would like to know who is responsible for this and what liability I have to pay the required amount.

As far as I am aware whatever I have earned has been appropriately taxed and whenever I have changed car I have used on-line calculators to gauge the amount of tax I would have to pay and these have reflected the subsequent tax coding I have been given.

Would appreciate any advice on how I should tackle this.

Thanks.

withabix

When did the company car and private healthcare start or when were there changes of car etc?

Were the changes taken into account on P11Ds?

Private fuel benefit? Fuel card tax?


The first thing you need to do is ask HMRC for the breakdown of the tax owed.

If it is actually owed, you will have to pay it, irrespective of it being the fault of you, your employer or HMRC.

CLAPTON

tax is all about detail

are the assessment correct or incorrect?

maybe provide the details

bfgun

withabix wrote: »

When did the company car and private healthcare start or when were there changes of car etc?

Were the changes taken into account on P11Ds?

Private fuel benefit? Fuel card tax?


The first thing you need to do is ask HMRC for the breakdown of the tax owed.

If it is actually owed, you will have to pay it, irrespective of it being the fault of you, your employer or HMRC.

Thanks for your reply.

The healthcare and car has been in place for 6 years although the car will be changed annually.

Whenever I have changed vehicle I have personally notified HMRC and duly received a tax coding notice to reflect the change.

I don't have a fuel card / private fuel benefit.

I'm going to contact HMRC / Employer to get to the bottom of this but wondered where my liabilities stand.

jimmo

If you have had a new company car each year for the last few years you really ought to be used to this. Whilst phoning HMRC each time you get a new car is probably a good idea it wouldn‘t totally eradicate the problem. PAYE tax codes work over the tax year so when you change your company car, assuming that the new car has a higher benefit charge than the previous car, you will have underpaid tax from April until your code is changed. Therefore you should have had a tax underpayment virtually every year

Having said that a £3000 underpayment over 2 years, for changing cars seems a lot to me. Have you checked the HMRC figures? Do you agree that, mathematically at least, you have underpaid by £3000?

If so you need to examine what went wrong and who, if anyone, is to blame.

If, as you say, you informed HMRC each time your car changed, and the HMRC letter you recently received was the first indication that you had underpaid for 2010/11, there is a possibility that the underpayment should be written off under Extra Statutory Concession A19. Do a search on this forum for A19 and you will find 178 threads.

If you can’t pin down a claim under ESC A19 the buck will almost certainly stop with you and, one way or another, you will have to pay up.

Do the basics first.

Was the HMRC letter actually forms P800 for 2010/11 and 2011/12?

If not, what was it?

Are the figures for pay and tax deducted correct? Do they correspond to your P60s?

Do you have copies of your P11ds?

Are the benefits figures on your P11ds correct?

Are the figures from the P11ds correctly reflected in the HMRC calculations?

You may also want to consider what happened in earlier years. If the £3000 underpayment is correct there has to be a strong possibility that you underpaid in previous years as well and HMRC has missed that.

It could be better to let sleeping dogs lie.

As others have said, details will help..

bfgun

jimmo wrote: »

If you have had a new company car each year for the last few years you really ought to be used to this. Whilst phoning HMRC each time you get a new car is probably a good idea it wouldn‘t totally eradicate the problem. PAYE tax codes work over the tax year so when you change your company car, assuming that the new car has a higher benefit charge than the previous car, you will have underpaid tax from April until your code is changed. Therefore you should have had a tax underpayment virtually every year

Having said that a £3000 underpayment over 2 years, for changing cars seems a lot to me. Have you checked the HMRC figures? Do you agree that, mathematically at least, you have underpaid by £3000?

If so you need to examine what went wrong and who, if anyone, is to blame.

If, as you say, you informed HMRC each time your car changed, and the HMRC letter you recently received was the first indication that you had underpaid for 2010/11, there is a possibility that the underpayment should be written off under Extra Statutory Concession A19. Do a search on this forum for A19 and you will find 178 threads.

If you can’t pin down a claim under ESC A19 the buck will almost certainly stop with you and, one way or another, you will have to pay up.

Do the basics first.

Was the HMRC letter actually forms P800 for 2010/11 and 2011/12?

If not, what was it?

Are the figures for pay and tax deducted correct? Do they correspond to your P60s?

Do you have copies of your P11ds?

Are the benefits figures on your P11ds correct?

Are the figures from the P11ds correctly reflected in the HMRC calculations?

You may also want to consider what happened in earlier years. If the £3000 underpayment is correct there has to be a strong possibility that you underpaid in previous years as well and HMRC has missed that.

It could be better to let sleeping dogs lie.

As others have said, details will help..

Thanks Jimmo for your comprehensive reply.

I have had a company car for years and every time I have changed it the subsequent tax paid has reflected the vehicle I have changed to so I have no reason to suspect that I have underpaid tax although I have had alleged tax underpayment notifications in the region of £200 - £400 previously and the amounts have been collected through a change in my tax code.

I say alleged because I am an employee and have no experience of how tax is calculated so am reliant on my employer / HMRC to accurately assess what my tax code should be.

I have kept all my P60's, P11D's, Tax Coding notices for the period concerned and will go through these.

It was the P800 forms that I received and one thing that sticks out is that the P800 for 2010-2011 shows that I paid no tax on my car benefit of £6757.

For 2011-2012 the car benefit value is shown as £13497 and again shows that I paid no tax.

I presume the substantial increase in car benefit is the previous years car benefit brought forward as I would have had the same type of vehicle and it certainly would not attract such a high car benefit value.

Contrary to the P800 showing that I paid no tax that is not what is reflected in my salary and it is only this year after downgrading my vehicle substantially that I now have an L tax code where previously it has been K.

I will be calling HMRC to get the ball rolling as I cannot believe that I could have underpaid such a substantial amount without realising this during the course of time.

Thanks again to you and all other respondents.

jimmo

As a gut reaction a scale benefit of £13,497 represents one hell of a car. As a random example I put in a list price of £25,000 and CO2 emissions on a petrol car of 200 into the HMRC calculator for 2011/12 and came up with a benefit of £7500.

http://www.hmrc.gov.uk/calcs/cars.htm

So you must have been driving something really special or someone has got the figures wrong.

bfgun

jimmo wrote: »

As a gut reaction a scale benefit of £13,497 represents one hell of a car. As a random example I put in a list price of £25,000 and CO2 emissions on a petrol car of 200 into the HMRC calculator for 2011/12 and came up with a benefit of £7500.

http://www.hmrc.gov.uk/calcs/cars.htm

So you must have been driving something really special or someone has got the figures wrong.

I had a nice car (Audi A5) but not to the level of one that would attract a benefit in kind of £13K!

The BIK for my car was £6757.

CLAPTON

with P60 info and P11d info and any pension payments the tax calculation should be fairly easy but without any figures its diffciult to make any progress

ceeforcat

I presume the substantial increase in car benefit is the previous years car benefit brought forward


This does not happen. As jimmo says, 13497 is practically impossible to achieve! Can you relay the P11D details for 2011/12? I presume that you had car fuel?

bfgun

ceeforcat wrote: »

I presume the substantial increase in car benefit is the previous years car benefit brought forward


This does not happen. As jimmo says, 13497 is practically impossible to achieve! Can you relay the P11D details for 2011/12? I presume that you had car fuel?

Hi ceeforcat.

I do not have fuel included. I pay for all fuel upfront and then claim x pence per mile for every business mile conducted.

Ironically I have actually lost between £20-£30 per tank for business mileage conducted as the amount I can claim totals less than the cost of a full tank!

My P11D details for 2011-2012 were as follows (I had 2 different cars for that tax period)

Car 1 - 6/4/2011 - 31/8/2011 = £2832 cash equivalent

Car 2 - 1/9/2011 - 5/4/2012 = £3619.91 cash equivalent

Bupa - £1250.35