Prudential Pension Tax Payment Error

Tyrannosaurs

A friend has recently had a demand from HMRC for several thousand pounds of income tax relating to 2010-11.

From what she's been told it seems that her pension company (the Prudential) have mispaid income tax on her behalf (she was working and claiming a small personal pension) and it's now come back to haunt her.

Speaking to HMRC they've been pretty good - they've set up a reduced weekly repayment plan over a couple of years but they've also said that they can take it up with Prudential on her behalf.

She's not someone who is going to fight it herself so she's happy with this idea but I wondered was this something anyone was familiar with and did people have any idea what the chance of success was?

EDIT: What I'm trying to establish is is this a known issue that has been seen before. What she's told me potentially makes sense but she could have misunderstood and I'm just seeing what I can find out to help.

Cheers

J

dunstonh

It seems that her pension company (the Prudential) had mispaid income tax on her behalf (she was working and claiming a small personal pension) and it's now come back to haunt her.

Prudential would use the tax code given to them by HMRC. Whilst an error by Pru is possible, it is more likely the error is either by HMRC or self assessment.

She's not someone who is going to fight it herself so she's happy with this idea but I wondered was this something anyone was familiar with and did people have any idea what the chance of success was?

What is she trying to achieve?
What actually was wrong?

Tyrannosaurs

dunstonh wrote: »

Prudential would use the tax code given to them by HMRC. Whilst an error by Pru is possible, it is more likely the error is either by HMRC or self assessment.

The HMRC have specifically told her it was am error by the Pru and offered to take it up with them.

To me that sounded as if this wasn't a one off though I'm obviously reading a lot into that.

What is she trying to achieve?
What actually was wrong?

What's wrong is that through no fault of her own she owes several thousand pounds which she's going to struggle to repay. Yes she can do it over time but even that's going to cause some significant inconvenience.

I'm looking to see if anyone else has come across HMRC offering to take something up with a third party (ideally specifically the Pru) and what the chances of any sort of useful outcome are (such as the Pru - if indeed it is their error) offering some form of goodwill payment to help cover the amount).

noh

What dunstonh was asking is what mistake did the Prudential make? Did they apply a different tax code to the pension payments than the one supplied by HMRC?
What tax code did they apply?

The other thing that doesn't quite add up, in my mind, is that you state she owes several thousand pounds tax for 2010-2011 but also describe it as a "small pension". I see several as around £3K therefore the pension would be around £15K which is not small. Unless the pension payments pushed her into the 40% tax bracket then it is likely to be a self assesment problem.

dunstonh

The HMRC have specifically told her it was am error by the Pru and offered to take it up with them.

I've been doing this for over 20 years and you tend to find tax issues are nearly always the fault of HMRC or the individual. There is actually very little the provider can do wrong as HMRC tell them what tax to take. It could be Pru but I wouldnt accept it is gospel

What's wrong is that through no fault of her own she owes several thousand pounds which she's going to struggle to repay. Yes she can do it over time but even that's going to cause some significant inconvenience.

The UK tax system is self assessment. You have to deal with your own tax. If she owes money, even through a third party error, then she still owes money. It seems to be resolved though as HMRC have agreed for it to be paid back over a couple of years. That is strange in itself as if it was the fault of Pru you would expect HMRC to collect the tax via the pension and PAYE code. Why are HMRC being so accommodating for someone else's error?

I'm looking to see if anyone else has come across HMRC offering to take something up with a third party (ideally specifically the Pru

I doubt HMRC are taking up with the Pru. I think you are getting third party misinformation.

As is stands I suspect the wrong tax code was used. HMRC tell the pension provider which tax code to use. Now that the HMRC have realised the wrong tax code was used, they will notify Pru of the new tax code (that is what they will "take up" with Pru).

We dont have enough to go on. We need to know what this "mistake" is. At the moment, it just looks like a an every day tax code mistake. Probably along the lines of Pru paying no tax (or not enough) because other income had not been declared or HMRC had not taken it into account.