Taxable earnings declared in wrong tax year (Asda)

John_Pierpoint

I used to have this problem with my late mother's state pension cash payments - the odds were that she had seen no reason to keep the old pension book and I would be flaffing about trying to work out if it had been a 53 week year and exactly when the annual increased had occurred.

So I telephoned the social security people and they, as though trying to explain to a cretin on weekly pay, that I just needed to "multiply by 52, that is what we do".

Surelythe problem here is that when PAYE was invented the majority of Wal Mart type employees would not have paid tax and those who did were paid weekly anyway.

jem16

John_Pierpoint wrote: »

I used to have this problem with my late mother's state pension cash payments - the odds were that she had seen no reason to keep the old pension book and I would be flaffing about trying to work out if it had been a 53 week year and exactly when the annual increased had occurred.

So I telephoned the social security people and they, as though trying to explain to a cretin on weekly pay, that I just needed to "multiply by 52, that is what we do".

That's an entirely different situation. State pensions are paid gross with no tax taken at source.

This is a situation that has arisen as workers were given a higher tax-free allowance than they were entitled to.

Surelythe problem here is that when PAYE was invented the majority of Wal Mart type employees would not have paid tax and those who did were paid weekly anyway.

The same thing will happen with weekly paid workers, but more frequently.

The main difference is the amount of tax underpaid for weekly workers was ignored as it was under the threshold of what was allowed.

jimmo

dori2o wrote: »

This is not something new. This situation raises its ugly head every so often for those people paid weekly (every 5 or 6 years), those paid 2 weekly (every 11 years), and those paid 4 weekly (every 22 years).

This has been the case since PAYE was introduced in 1944.

Whilst it is perfectly true that week 53, 54 and 56 payments have been an issue for a very long time HMRC (IR) have changed the way they deal with them in relatively recent years.

The current staff manual simply says that the extra allowances given under PAYE do not apply for assessment purposes. Assessments must only be made on a statutory basis. Any self assessment therefore claws back the extra allowances and creates an underpayment of tax.

http://www.hmrc.gov.uk/manuals/eimanual/EIM42420.htm


However the same staff manual from 2006 pretty much encourages staff to try to dissuade people from requesting assessments if it would cause an underpayment.

link2006


Going back to 2003 it was different again and specifically tells staff not to make assessments just to recover the week 53,54,56 tax.
link 2003


Therefore, certainly up until 2006 HMRC would not have made an assessment (or calculation) solely to claw back the week 53,54,56 underpayment.

Nowadays it seems they will, subject to assessing tolerances. That, I think is the issue that needs to be addressed if anybody wants to fight their underpayment.

dori2o

jimmo wrote: »

Whilst it is perfectly true that week 53, 54 and 56 payments have been an issue for a very long time HMRC (IR) have changed the way they deal with them in relatively recent years.

The current staff manual simply says that the extra allowances given under PAYE do not apply for assessment purposes. Assessments must only be made on a statutory basis. Any self assessment therefore claws back the extra allowances and creates an underpayment of tax.

http://www.hmrc.gov.uk/manuals/eimanual/EIM42420.htm


However the same staff manual from 2006 pretty much encourages staff to try to dissuade people from requesting assessments if it would cause an underpayment.

link2006


Going back to 2003 it was different again and specifically tells staff not to make assessments just to recover the week 53,54,56 tax.
link 2003


Therefore, certainly up until 2006 HMRC would not have made an assessment (or calculation) solely to claw back the week 53,54,56 underpayment.

Nowadays it seems they will, subject to assessing tolerances. That, I think is the issue that needs to be addressed if anybody wants to fight their underpayment.

The problem is that under the old PAYE computer system, and previous to that with paper records, it wasn't possible to assess everyones record, there simply wasn't the man hours available to do it as they were all done manually.

However, since the introduction of the new system (NPS) every persons record (except those subject to self assessment) is reviewed at the end of every year automatically, with only those that can not be reconciled automatically being reviewed by way of human intervention, and with the introduction of RTI even this human interaction will soon be a thing of the past.

I personally, from experience, don't see any angle that anyone affected can use to have the underpaid tax written off.

Nobody, not HMRC and not the employer, has acted against the regulations or against their own proceedures.

patanne

Surely, for the future, this is just a simple payroll software problem. Do HMRC have to give approval for payroll software, I'm sure they used to do? All it needs is a question at the beginning after the one where it asks how often the employee is paid. If monthly - no supplementary question. For all other pay periods - just the question of how many pay periods there are in the year. It would save this sort of thing happening in the future to anyone. Save HMRC a lot of postage too!

squidgysponge

I couldn't agree more. My people services manager told me today "its happened to lots of people working at other companies too." like it didn't matter. I replied "it may have, but its not like we live in victorian times anymore. Its a case of putting 14 pay days into a computer instead of 13. My issue is why is it allowed to happen when so many employees are detrimentally affected."

jimmo

dori2o wrote: »

The problem is that under the old PAYE computer system, and previous to that with paper records, it wasn't possible to assess everyones record, there simply wasn't the man hours available to do it as they were all done manually.

Actually there was time and we did. However the ratio of staff to customers was very different to today’s HMRC but that’s a different argument. Also, pre SA we also used to include week 53,54,56 adjustments in Schedule E assessments but I couldn’t get back that far on the archive site.

My point is that it is HMRC who have moved the goal posts, not ASDA and not the payroll company. Therefore HMRc should be the target of any campaign.

What we did was perceived, by the Board, as fair in those days. Whether it was, or unfair to the monthly paid, is a matter of opinion as is what has happened this year and what should happen in the future.

When you are a Civil Servant it often helps not to have an opinion and simply apply the law, and HMRC procedures as laid down.

I agree with you that it seems unlikely they will achieve anything but stranger things have happened in the past.

patanne

Does any employer actually still use the printed paper that HMRC used to issue every year to work out how much tax & NI is due? If not then there is absolutely no excuse for the week 53 etc fiasco. It is just the will to sort it that is lacking. Why should monthly paid employees pay all the tax due & 4 weekly employees get the occasional end of year tax bill so they pay all the tax due and weekly and fortnightly paid "get away with it" because it isn't so much. Not blaming the employees here obviously just the system - which could so easily be changed. And don't get me started on K codes and the restrictions on.
I feel sorry for the call centre people (only these - all other call centres are excluded) who have to deal with the calls because they must know that the situation is avoidable & not be able to say anything. Perhaps if the higher echelons at HMRC had the take home pay that Asda employees had they may not be so blase about bills for over £100.

sal78

I also work for asda in-store and so does my husband at the depot. Both of us have received a p800 tax calculation. Have finally got through to the tax office first thing this morning as I was convinced the amount I had to pay was wrong. I was right. My underpayment was £138.80, now its £126.80. My tax code for 2012-2013 was 816L when the normal code for most people was 810L, which means I could earn £8165 before paying tax instead of £8105 which is a difference of £60. £60 is the amount that you get paid for washing of your uniform but you are supposed to apply directly to the tax to get it which I hadn't. The £60 was not factored in when calculating the amount on my p800 so this is why it came out at a higher figure. It should have had it displayed in the 'deductions from income' box as flat rate job expenses just like my husbands' had but the box was blank. The tax advisor I spoke to said he had never come across anything like it before as Asda had given me the tax code 816L but hadn't been informed by me to claim for the washing of uniform allowance so that code wasn't registered with HMRC so that's why it didn't appear on the P800 I received so that's why they couldn't calculate it properly.
If Asda have done that to me they may have done it to several others so check the P800 that you received from HMRC against your code as if its the same as mine it may reduce the amount you have to pay which if like me you were asked to pay it within 3 weeks as its not possible to deduct from your tax in the next tax year as you don't earn enough you may be able to paay it through your tax now. £12 difference is all it took for me now to pay it through my tax code instead of next week.

So basically if you had a tax code of 816L for last year make sure on the P800 you received that in the 'deductions from income' it says flat rate job expenses and the figure for £60 is stated if not then it may be worth giving HMRC a call which is not easy to get through. I phoned every hour but got through at 8 in the morning when their lines open.

If you are not claiming the washing of your clothes allowance it is worth claiming as you can go back 4 years. It basically means you can earn £60 more before paying tax a year, you don't actually physically get £60 you get 20% of it so £12 a year for 4 years so in total that's £48 which they may take off the amount that you owe them reducing it further.

Sorry this is so long its very complicated and difficult to explain. Hope it goes some way for people checking their amount.

squidgysponge

Just a quick update. My 3rd attempt at raising this as a complaint against HMRC has just been posted. Hopefully this time an adjudicator can look into why this was allowed to happen.

Obviously HMRC offered incredibly bad guidance on this matter, which was confounded further by Asda not notifying colleagues when they were well aware it was going to happen.

My personal take on it is Asda were aware it would wipe out approximately the bonus payment from all colleagues for last year and decided to keep quiet and let HMRC take the blame by sending out underpayment demands.