Asda tax issues

jem16

caseymay wrote: »

She was paid by asda on 6 April 2013 ie start of tax year 2013-14 - Asda should have put in place week 56 payment in place - have looked up - which compensates for these anomalies (apparently only comes around once every 22 or 23 years) - maybe is because they are now run by walmart who may not understand paye in this country.

Your daughter would have been paid on the 5th April which was the last day of the tax year and brought about the Week 56. It looks like Asda have handled it correctly and paid it on a Week 1 basis.

This will mean an underpayment as your daughter has received more than her tax-free allowance.

Many thousands of asda workers are now being hounded - they are not at fault it is the company - I think many people are tearing there hair and worrying how to pay - many are just keeping their heads above the parapet and this could be life or death for some people.
:mad:

It's not really anybody's fault. It's just something that happens every so often for those paid weekly/fortnightly/4 weekly. Unfortunately the year doesn't divide neatly into those amounts. It either means that one pay is received with no tax-free allowance or an underpayment is recorded for that tax year.

Normally you would expect HMRC to code out the underpayment in the next tax year.

chrisbur

caseymay wrote: »

my daughter has today received a demand from hmrc for owing nearly £126 for tax year 2012-13 (year ending 5 april 2013).

She was paid by asda on 6 April 2013 ie start of tax year 2013-14 - Asda should have put in place week 56 payment in place - have looked up - which compensates for these anomalies (apparently only comes around once every 22 or 23 years) - maybe is because they are now run by walmart who may not understand paye in this country.

Many thousands of asda workers are now being hounded - they are not at fault it is the company - I think many people are tearing there hair and worrying how to pay - many are just keeping their heads above the parapet and this could be life or death for some people.
:mad:

I think that the payday must have been 5 April as it is payment on 5 April or in a leap year 4 or 5 April that triggers a week 56. The employer has acted correctly they are instructed to give an extra tax allowance of 1/13 of the yearly tax allowance but the tax office are then working out the tax using just the basic year's allowance, resulting in the under-payment of tax.
The situation was warned off in the employer's bulletin on page 8 at....
http://www.hmrc.gov.uk/payerti/forms-updates/employer-bulletin/bulletin44.pdf
Employers were told

"At the end of the tax year, when we receive details about employee pay and tax, some of your employees’ may have underpaid tax if your payroll is operated in this way, and we would be grateful if you would advise your employees of the position. "

bmille12

Hey guys, I work for Asda. Today I got the same letter as did a number of others I work with (£72 for me, ranging all the way up to 160 for others). Someone who was off phoned MRC and was told that, as Asda has agreed to handle our tax via PAYE, it is due to their negligence that the tax was not paid, and therefore they are liable to cough up the money and pay the tax now. For this, you should write a letter to HMRC saying you believe this to be true - the details of doing this are actually covered in the letter you have been sent.

As I said, this comes from a guy I know, not my own experience, so I'd advise you to phone HMRC yourself and ask about this before assuming it to be 100% correct. But, as Asda did not correctly apply the tax, it does seem to me like it was their fault - as employees, we have no control over the tax paid through PAYE, so we could not have done anything.

From what I understand, the problem was caused by Asda having a 14th pay period last tax-year, but did not implement a 56-week tax plan and stuck to their normal 52-week one, resulting in no tax being paid for the final pay period.

jem16

bmille12 wrote: »

Someone who was off phoned MRC and was told that, as Asda has agreed to handle our tax via PAYE, it is due to their negligence that the tax was not paid, and therefore they are liable to cough up the money and pay the tax now. For this, you should write a letter to HMRC saying you believe this to be true - the details of doing this are actually covered in the letter you have been sent.

That is not correct and would be a waste of time. Asda has acted correctly as per HMRC guidelines. The only way they are wrong is in not informing their employees.

From what I understand, the problem was caused by Asda having a 14th pay period last tax-year, but did not implement a 56-week tax plan and stuck to their normal 52-week one, resulting in no tax being paid for the final pay period.

The Week 56 was implemented. HMRC's instruction is to pay on a Week 1 basis which means giving an extra tax-free allowance. If this had not happened then all employees would have been liable for 20% tax on all of their Week 56 pay. This would have seen the tax correct for the tax year but most employees would have complained that they paid more tax than normal. To keep the normal pay an extra allowance is given but this will mean an underpayment for that tax year which would be collected during the following tax year.

caseymay

Looked at my daughters pay check for p/e (period ending I think) 6 april 2013 and her code was 810L but did not have 1 after it which indicates week1/month1 basis.

I think asda should take responsibility as they apart from week 56n or week 56y did not explain to their employees and they who paid tax in 2012-13 are now liable and the amount will run into millions.

I suggest everyone gets onto payroll or head office and complain - a letter or memo should have been sent to the employees who are the innocent parties in this - the ones who pay their tax faithfully every 4 weeks.:mad:

jem16

caseymay wrote: »

Looked at my daughters pay check for p/e (period ending I think) 6 april 2013 and her code was 810L but did not have 1 after it which indicates week1/month1 basis.

It wouldn't do as 810L cumulative was her normal tax code for 2012/13.

The Week 56 is handled separately as per HMRC's guidelines.

http://www.hmrc.gov.uk/payerti/payroll/non-standard/week-53.htm

I think asda should take responsibility as they apart from week 56n or week 56y did not explain to their employees and they who paid tax in 2012-13 are now liable and the amount will run into millions.

According to this post Asda did inform their employees.

http://forums.moneysavingexpert.com/showpost.php?p=62417623&postcount=4

Jo_F

It's not just Asda, this is happening in a lot of other companies at the moment.

scuddy

With all due respect, NOBODY who works on the shop floor, nationally, has been warned about this. Nothing has been passed down at anytime from Payroll or HR about this. The first anyone knew of this were letters through their door.

There have been many calls to the taxman apparently, who has stated that the company IS at fault.

jem16

scuddy wrote: »

With all due respect, NOBODY who works on the shop floor, nationally, has been warned about this. Nothing has been passed down at anytime from Payroll or HR about this. The first anyone knew of this were letters through their door.

If that is the case, then yes Asda should have made you more aware. Some at least were aware.

There have been many calls to the taxman apparently, who has stated that the company IS at fault.

Tax wise Asda seem to have followed the guidelines set by HMRC. If anyone at the call centre is telling you differently they are wrong.

Apart from making sure that everyone knew what would happen, is there any other way you feel that Asda should have acted?

Would you have been happier that your pay on the 5th April was £126 less than normal?

Ultimately the tax is owed. Last tax year you had £8105 of personal tax-free allowance. With the 14th pay of the tax year you ended up having £623.46 extra allowance which at 20% tax is £124.69.

scuddy

Ultimately there was no communication from the company to the workers. None whatsoever. No letter, no leaflet, no note, memo or phone call, nothing to anyone.

Employees of HMRC at the Leeds tax office, in Lisbon Street, are telling colleagues that the company is at fault in how it has dealt with it.

I would have been happier if I had paid the correct amount of tax this year. They must have known there were going to be 14 pay periods throughout last year, and should have adjusted the tax paid accordingly. In my view that would have been the correct way to do it.
160,000 letters being sent to the taxman in Leeds is going to cause one hell of a backlog.............