Challenging Underpayment Restrictions

Pottster

I've just ust got me new tax code and it contains detail of an Underpayment Restriction that apparently relates to a taxable amount for payments made to me by my former employer for expenses in the tax year 2010/11.

On checking my records, I didn't receive any expenses payments from my employer in 2010/11

I'm challenging this and am sending HMRC a letter with copies of my P60 and payslips that show I didn't receive any expenses and I paid tax on all my salary received in 2010/11 and that I am challenging the restriction.

I don't expect I will get a speedy response from HMRC, so I was wondering if anyone else been hassled by an Underpayment Restriction? or can shed any light on whats going on here?

Dazed_and_confused

An underpayment restriction on your notice of coding would not include information about why a tax underpayment arose.

I assume therefore that you have contacted HMRC and have been advised that the underpayment relates to the expenses from 2010/11.

You are probably wasting your time sending your P60 and payslips, from what you have said it sounds very much as though the underpayment has occurred as your former employer has submitted a P11D, certificate of expenses and benefits, for 2010/11.

You would be better off asking for the information (a copy?) of the information supplied by your former employer so you can understand exactly what they have done. HMRC have almost certainly just calculated your tax based on information supplied by your employer(s).

If the underpayment is as a result of information from your employer then you are likely to have three outcomes,

1. The information your former employer has supplied is correct and the tax is due.

2. The information your former employer has supplied is correct but you can make an expenses claim to HMRC that counters, in full or part, the expenses declared by your former employer. The underpayment may then change and your tax code can be adjusted accordingly.

3. The information supplied by your former employer is wrong. In this situation HMRC have no reason to change anything and you will need to get your former employer to submit a corrected P11D certificate.

If the underpayment is reduced and your current tax code increases then any tax you have overpaid in the current tax year due to the Underpayment Restriction will be refunded via your wages by your current employer.

I haven't used it but other MSE posters have mentioned a tool on HMRCs website that gives you an idea of how long it will be before you get a response to your letter. As I have already said though I think you are wasting your time going down the route you set out in your post.

Pottster

Thank you for such a comprehensive reply, the original plan of action is what they advised me to to on the HMRC automated 'help-line'

It makes much more sense now and my conclusion is that the information sent by my former employer is wrong and I will need my former employer to submit a corrected P11D certificate.

So my next step is to contact my former employer and obtain information on the P11D submitted for 2010/11.

Many thanks.