Underpaid tax by over £600!

Northerner2013

Hello - wonder if anyone can help with this?!

My parents gave me a letter on Saturday that'd gone to their address. It was from the Inland Revenue and said that I underpaid tax in 2012/13 by over £600. The reason they gave was 'you had two employments at the same time and both employers were giving you the full tax free allowances - therefore you received more allowances than were due' . This isn't right, I moved from one full-time PAYE job to another full-time PAYE job in January and immediately gave my new employer (where I work now) my P45 from my last job - which said my tax code was 810L.

Having looked through my Feb & March payslips from my current job, I can now see that although it says my tax code is 810L, they have not taken any tax during these two months - but took National Insurance and Student Loan payment (I know, I know - I should have checked my payslips).

The part where this gets really confusing is why they sent the letter to my parents house? I moved out of there last year and both my P45 from my last job and my recent P60 both have my current address on them. Both employers have my current address. I'm wondering if they are confusing me with my brother again as he lives at that address and has a very similar NI number? (this happened several years ago - very weird).

Looking at the April and May payslips, they started to take tax and changed my code to 944L.

Has anyone got any idea where I stand with this as I have just received the letter and they're demanding I pay in full by 22 June, even though it is less than £2000! I'm pretty sure none of this is my fault (apart from not reading my payslip).

Any advice appreciated! Thanks

Northerner2013

...or HMRC as they're now called!

Dazed_and_confused

When did you tell HMRC your current address?

As far the tax goes think of it as an interest free loan, you could have had to pay it a few months ago rather than now.

Might also be worth letting HMRC have an estimate of your current earnings when you let them know your correct address, as it is a daily small amount and less than £2000 they may then be able to collect it in next years tax code, £50/month from April 14 to March 15.

Northerner2013

Didn't even realise you had to tell them your new address if you pay through PAYE..told just about everyone else. Having just checked now though I can see that you do, very odd that the don't have the P60 details in a database somewhere.

Any idea how this could have happened though? How did they have me on a tax code and take NI and Student Loan but not tax?

Dazed_and_confused

Northerner2013 wrote: »

Didn't even realise you had to tell them your new address if you pay through PAYE..told just about everyone else. Having just checked now though I can see that you do, very odd that the don't have the P60 details in a database somewhere.

Any idea how this could have happened though? How did they have me on a tax code and take NI and Student Loan but not tax?

From your original post it sounds like your new employer might have used the tax code from your P45 but not the previous income & tax details when they worked out your wages.

You could ask your payroll clerk what happened but assuming the calculation includes the correct income/tax paid for last year that won't alter the fact that you have the £600 to pay now (or some time in the future).

Savvy_Sue

Would be worth posting up your figures for both employments, and whether you ever had any tax code other than 810L last year, or you could put the figures into one of the tax calculators and see if you agree with their figures!

The taking of NI and Student Loan when Employer 2 didn't deduct any tax isn't really a surprised, as they are both calculated on a strictly per month basis rather than over the whole year.

Northerner2013

Thanks both - figures look about right for the year except for the 0.00 tax deductions on the Feb and March payslips in this new employment. The tax in previous employment was 810L throughout and all looks fine.

My parents received another letter for me today (dated 23 May..received today...hmmm) saying something along the lines of...I need to pay it in full and it can't be paid through PAYE because the tax is more than half of my monthly pay (or something...my mum wasn't very clear on the phone when explaining!). I earn a decent enough wage and can afford to pay an extra £50 a month - so not sure how they have come to a conclusion otherwise. The £600 on top of a very large increase in a utilities bill this month may just send me skint though! The whole thing is very confusing...will see what payroll say next before talking to HMRC.

John_Pierpoint

I have a funny feeling that the HMRC system thinks you are now on the dole and thus cannot afford to pay your overdue missing tax from your meagre benefits, as the system won't allow more than 50% to be deducted from your income.
First step has to be to check that £600 is indeed how much you owe for last year, as recommended by SS above.
Step two is then to correct your address.
[It is well known that the NI is not a unique identifier of an individual as it does not have a "check digit" routine to effectively reduce to near zero the possibilities of clerical errors.
http://en.wikipedia.org/wiki/National_identification_number
http://en.wikipedia.org/wiki/Check_digit
Presumably someone in the government/civil service has "funked" this job for the last 50 years.
Beware of problems when you need to claim contributory benefits]

chrisbur

Can you give the details that appear in sections 6, 7 and 8 of part 1A of your P45?

jamesd

After doing the clarifying here, this is the sort of thing that might be best handled during a phone call to HMRC so you can answer any questions they have about the jobs and income situation. It looks as though they might still be confused, considering the more than half monthly pay statement.