PAYE error

coachtug

Thanks Sue, although the error sounds different it does sound as if the outcome is similar.

Especially as HMRC must have been informed by the company in 2010/2011 (when they became aware and told us) but as yet HMRC have not contacted me. Which implies to me that HMRC are chasing the employer.

tyllwyd

My OH had a tax underpayment at work wrt milage (he was being reimbursed his travel to the place where he was contracting but HMRC told his employer that they should have been adding that to his salary and he should have been paying PAYE tax on it). He wasn't chased for the underpayment, and the company had to pay.

antrobus

I'd guess that what we're talking about is a Group Personal Scheme - official definition a scheme "run by a pension provider that your employer chooses, but your pension is an individual contract between you and the provider". Contributions are made net of tax i.e. the provider claims tax relief at the basic rate on your contributions, the employer just handles the admin in payong the contributions to the provider. Some twonk in payroll didn't understand this, and treated the employee contributions incorrectly, and gave the employees tax relief on the employee contributions via PAYE. HMRC eventually realised this was the case and demanded the money back from employer. Presumably because they have decided that the employer failed to take 'reasonable care' in operating PAYE.

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

The question is whether the employer is then entitled to recover the money from the employee. I don't know is the answer. But I imagine that the employer has also asked the question, and the fact that they are asking the OP to authorise them to deduct the amount from their pension (rather than just demand the money) would suggest to me that they didn't get the answer that they wanted.

If I was the OP, I would refuse to authorise any deductions from my pension and I would deny any liability. In any case if we are talking about errors made in the period 2005-2010, then the Limitation Act would apply to anything paid in December 2006 or before.

John_Pierpoint

coachtug wrote: »

Obviously I'm a bit bemused by the whole thing hence my post.

I think you are almost right John, although HMRC are chasing the employer not pension company.

The rectification caused the PAYE to shift so that we paid tax on the full income and continued to receive tax relief at pension. So I think the error was with PAYE rather than pension.

Which means its the company at fault rather then pension provider?

It was looking like that to me too, but it definitely is not you that initiated the mess. If you got involved in trying to rectify things you risk getting into a mess over higher rate tax and HMRC rules that do not match the statute of limitation laws that apply to ordinary people in both England & Wales and in Scotland.

So you have a choice:
Continue to ignore the employer until he gives up. Do not acknowledge the debt in any way.
He just might try to take you to court or be spiteful in giving future references. He cannot take you to court without creating a clear and understandable explanation of the supposed debt. Let him try to sue his auditors.

Approach the pension provider and see if they have been involved so far, You might be able to get the pension provider to write the "Not our problem - get lost" letter, instead of you getting so involved.

I don't normally agree with people being bloody minded about exact dates and feel you have a moral obligation to help sort out the mess but as a victim of HMRC refusing to acknowledge a tax reclaim because I though I had 6 years (PAYE) to sort out a mess, when I sent in the claim after 5 years and 10 months - then those who live by the sword die by the sword.

I will now return from the debtfreewannabee forum board to the "saving tax" board.;)

jem16

John_Pierpoint wrote: »

II don't normally agree with people being bloody minded about exact dates

I don't normally agree with not paying back tax owed either but I'd not be rushing into giving the ex-employer permission in this case either.

If HMRC thought you owed tax you can be very sure they would have sent you a P800 letter long before now. They clearly have not and have also reviewed the OP's tax when he later claimed higher rate tax relief. They found no problem then and clearly from the employer's P60 to the OP, there is no reason to. Taxable pay and tax paid are correct.

As to HMRC's normal reasoning of people should know about tax and make sure their tax is correct, as far as the OP is concerned from his payslips and P60s it is correct. Tax code was correct, tax paid according to taxable income was correct.

So in this case the employer has made one huge error but is expecting the employee to clear up the mess. They are also asking further back than HMRC would go.

I would also imagine it's a little more complicated than just adding up extra tax relief and saying that's what you owe us.