Employer Liability for incorrect Tax Code

mini8334

Dear Wise Ladies and Gentlemen,

I have a complex issue regarding my Tax.

I received a Letter from HMRC in November 2012 stating that I owe £5825.37 in arrears for the tax years 08-09, 09-10 and 10-11. I was directed to send a ‘Self Assessment’ form

This letter was not received until I returned from having been serving Overseas for 6 months . . .

In February 2013 I received a £100 penalty for having not sent in a ‘Self Assessment’ form for the tax years 08-09, 09-10 and 10-11.

During these years I was working within the UK for a large children’s charity on full time employment contract. Therefore, I could not understand that I was meant to fill in a self assessment form?

I then was sent my statement from HMRC for the Tax years showing that throughout I had been on an NT tax code. At the time of employment I was an 18 year old boy who had not understanding of tax codes.

Therefore, I had not paid tax on the earning for this period.

I am happy that everyone must pay tax and I understand the necessity to repay.

However, my Employer for this period was never told to put me onto a NT code. They also said that for a company to put me onto an NT tax code that HMRC would direct the company to do so – and they never had.

I have been advised (indirectly) by HMRC employee that I should appeal due to a lack of competency in administrating it staff.

Why did my employer put me on a NT tax code for 3 years?

Are they in anyway liable for putting me in a position of having to pay £5800 because of their poor administration?

Do I have any grounds to appeal?

Has anyone had this happen before?

Any advise would be greatly appreciated.


NOTE: I have never been bankrupt or worked overseas during this period.



Kind regards,

MINI

Skint_yet_Again

Have you asked the employer why they used NT tax code ?

Usually they would only use NT code if you completed a form P38s student exemption declaration. Were you a student in full time education when you first started working for them ? If so when did you become a full time employee ?

Have HMRC given you a reason why you now been transferred to self assessment ? Is this because the debt is still unpaid, or did you have other income ? (If your only income was employment it may be because the debt was more than £2000/£3000 coding limit and cannot be coded)

You could try claiming employer error but this may only apply to p800 cases not self assessment

http://www.hmrc.gov.uk/thelibrary/tax-paye/emp-errors-deduct-paye.htm

CLAPTON

it would seem to me that your complaint is with HMRC; they receive your P60 details from your employer each year and they should know whether you should be on a NT code.

mini8334

Skint_yet_Again wrote: »

Have you asked the employer why they used NT tax code ?

Usually they would only use NT code if you completed a form P38s student exemption declaration. Were you a student in full time education when you first started working for them ? If so when did you become a full time employee ?

Have HMRC given you a reason why you now been transferred to self assessment ? Is this because the debt is still unpaid, or did you have other income ? (If your only income was employment it may be because the debt was more than £2000/£3000 coding limit and cannot be coded)

You could try claiming employer error but this may only apply to p800 cases not self assessment

Thank you very much. This is extremely helpful. I was studying at university and worked part time on a fixed contract over the summers for those years and Christmas holidays.

HMRC stated that they had never issued the company permission to use a NT tax code. They company has no idea why I was placed on it.

I do accept that I had not been paying TAX (unknowingly) however TAX code are not covered in the secondary education system.

It just looks like you become educated 6 years later with a £5800 bill!

The Link that you put up is of great help and I shall use it in writing my appeal letter.

Many Thanks!!

MINI

Takeaway_Addict

As far as I knew though someone can correct me that regardless of what the employer puts it is your responsibility to make sure you are paying the correct tax so there would be no liability from the employer.

jamesml

Even though it is your tax bill I would agree that between HMRC and their (ok, your employer) this shouldn't have fallen through the gaps. I would look at firstly arguing that HMRC were aware of your earnings from the P60 that was reported each year and they should have been contacting you at that point to collect the debt, and I would also be looking at whether your employer should take any liability.

You are right, it is your debt, but I'd be looking for some recognition of fault from those 2 as well.

Skint_yet_Again

mini8334 wrote: »

Thank you very much. This is extremely helpful. I was studying at university and worked part time on a fixed contract over the summers for those years and Christmas holidays.

If you were only working in the holidays and signed the P38s you would have told the employer on the form that you were exempt from tax as your total income for those years would be below

08-09 £6035
09-10 £ 6475
10-11 £6475

The employer would be able to use NT code in these circumstances without a tax code issued.

Was your total income above these amounts for each year ? (Have you checked that the original calculations include the correct income ?)
If your salary reached the limit for the tax year the employer should have then operated PAYE in the normal way and submitted a form P46 to HMRC and no longer used NT code.

Hope this helps

CLAPTON

Skint_yet_Again wrote: »

If you were only working in the holidays and signed the P38s you would have told the employer on the form that you were exempt from tax as your total income for those years would be below

08-09 £6035
09-10 £ 6475
10-11 £6475

The employer would be able to use NT code in these circumstances without a tax code issued.

Was your total income above these amounts for each year ? (Have you checked that the original calculations include the correct income ?)
If your salary reached the limit for the tax year the employer should have then operated PAYE in the normal way and submitted a form P46 to HMRC and no longer used NT code.

Hope this helps

maybe, maybe not

at year end HMRC receive the P60 info so they KNOW what the OPs earnings were for that year

they had the FULL information about his circumstances so they had NO excuse not to recover the under paid tax and to give a correct tax code for the following year.

He should write a complaint to HMRC under ESC A19 (internet search ) rules.

Skint_yet_Again

Clapton - As I understand it if a P38s statements is signed then there is no requirement for the employer to complete or submit a p60 or p45 ? (if qualifying conditions are met

P35 part 3 checklist Q1 http://www.hmrc.gov.uk/forms/p35.pdf

From 2004/5 onwards there is no need for the employer to submit P38s to HMRC

http://www.hmrc.gov.uk/manuals/pommanual/paye46046.htm

Also re ESCA19 (HMRC Delay) if OP signed a P38s to declare his income below the personal allowance I am not sure if the reasonable belief test would be met ?

nomunnofun

Takeaway_Addict wrote: »

As far as I knew though someone can correct me that regardless of what the employer puts it is your responsibility to make sure you are paying the correct tax so there would be no liability from the employer.

Unfortunately your assumption would not be correct. There are circumstances which can now render the employer liable for the underpayment.

http://www.hmrc.gov.uk/thelibrary/tax-paye/employer-errors-deduction-paye.pdf

Dazed_and_confused

CLAPTON wrote: »

maybe, maybe not

at year end HMRC receive the P60 info so they KNOW what the OPs earnings were for that year

they had the FULL information about his circumstances so they had NO excuse not to recover the under paid tax and to give a correct tax code for the following year.

He should write a complaint to HMRC under ESC A19 (internet search ) rules.

Whilst I can see HMRC could have acted sooner I fail to see how a claim under ESCA19 would be anything other than a waste of the OP's time and effort - there is no prospect of OP meeting the reasonable belief part of ESCA19 so any claim will be rejected.

Skint yet Again has mentioned one reason for this but another would be that it is clearly not reasonable to believe no tax was due on the substantial earnings the OP has clearly had - you don't owe nearly £6000 over just three tax years without earning a lot of money! Tax free allowances those years were nearly 20k (in total) so we're probably talking income of 50k in three years - is it reasonable to think no tax is due on that? What makes you think it is reasonable for OP to think his affairs were in order?