Can someone help me with underpaid tax issues

tbathgate

Ok basically this is my story

I started temping in a job in May 2004. I handed my employer a P45 that put me on basic rate tax code as it was from a second job. When I eventually got round to querying this they took all my details and immediately issued a tax coding putting me on 474L. This was all fine and I though that I would then start to get the overpayment of tax back. The first week I got paid on my new code I was given a £50 tax rebate, and then they stopped.

A week later the Inland Revenue wrote to me saying that whilst looking at my records it had become apparent that I had underpaid tax to the tune of £920 and they would collect it from April 2005. I queried this as I was baying basic rate on my second job, and was told that the payroll department hadn’t set my tax up properly and I had had two allowances for the year 2003-04. I was told that this wasn’t my fault and I shouldn’t worry and the extra tax would come straight out my wages.

However the have changed my tax code to 71L, and have started taking back tax from me(still with no sign of a rebate of what they owe me for the overpayment of tax).

Since this wasn’t my fault with the underpayment, do I have to pay this back to them or is there something else I can do to get smaller payments or get out of it. Surely since its their mistake it shouldnt cost me??

I have just been transferred to permanent with my employer and have been given my first pay for April which is only 3 weeks. On £952 they took £191 of tax and that’s not even a full months pay.

Is there anything at all I can do as they are going to be taking a hefty chunk of my wages of my and I cannot afford to lose the money.

Debt_Free_Chick

Sorry, but the fact that the mistake is someone else's fault is irrelevant to income tax. You have to pay the right amount and the Inland Revenue will collect it. They can go back 6 years and collect any underpaid tax.

I think it was Oscar Wilde who said there are only two things certain in life: death & taxes

tbathgate

Thats a pity, I don't mind paying it back but I have the funny feeling that come next March I am going to be looking at my tax and pay for the year and be contacting the inland revenue asking for tax back that has been overpaid.

Does anyone know about the tax coding part? If my normal tax code is 474L and i owe them £920, shouldn't my tax code now be 382L or something like that and not 71L because from that I read that it mean I am only allowed to earn £710 tax free this year where as I think my allowance should be £3820

Or does it not work like that?

mrcow

Not quite, as they need to get back £920, not just the tax that you would have paid on £920, so your tax code has to come down enough to cover the amount actually owing.

(for example if you're paying 22% on this, then your tax code will have to reflect a reduction of x/0.22 - where x is the amount of tax to be recouped)

The best way to check your tax is to wait for your P60 from your current job and work it out against your tax code and P45 for the entire year (to see if you did overpay last year). You can check the figure of £920 too by double checking your P60s from 2003/4.

IMO it's worth sitting down with a calculator and going through it for your own peace of mind, even if what they're doing does all work out right, as thinking that you are overpaying is infuriating......

System

The underpayment of £920 due to you having duplicate allowances during the 2003/04 tax year can be collected over more than one year if you request it.

The most likely reason for the duplicate allowances is either your second employer or you did not tell the Inland Revenue that you now had a second job in the 2003/04 tax year and so they did not have the chance to ensure that a basic rate code was operated against it since you were already getting your allowances against your first job.

If you completed a P46 for your second employer when you started, indicating that you were already employed elsewhere, and they failed to pass it to the IR or operate a basic rate whilst awaiting instruction from the IR then it is your employers fault and you can try to ask them to pay the underpayment.
Similarly if the IR did know and issued a Basic Rate code which your employer failed to operate then you again have the right to ask them to pay, although if this had been the case you would have received a copy of the coding notice and should have realised just by looking at your payslips that the wrong code was being operated and brought this to the attention of either your employer or the IR before it got to the stage of you owing £920.

The reason your code is so low is because to collect £920 they have to put a restriction in your code based on the fact that after your tax free allowances and 10% band has been used up you pay tax at 22% so

4181 x 22% = £920 and

Personal Allowance ( 2005/06) 4895 - 4181 = 714 = tax code of 71L
this code should mean an extra £76.66/month is being taken off you in tax ie £920/12 = £76.67

Any tax overpaid in the 2004/05 tax year will be refunded later when that tax year has been reviewed. Since that tax year has only just ended they will only be starting to review that for taxpayers over the coming weeks.
Once the IR has started to receive final returns from employers for the 2004/05 tax year and input them on their computer system the system should recognise that you have overpaid tax and your name will appear on a list to be reviewed with many many other people. It could be a few months before they work through to your name but they will get there.

If you want them to review it sooner you need to send your main tax office your P60's from both jobs. If you haven't received them yet you should receive them soon. Send them with a covering letter stating you think you overpaid tax in 2004/05. The IR have a legal obligation to act on any post they receive within 15 working days of receipt whether that is to request further information from you or issue a refund. Hope you get it sorted soon.

Elaine_Wilson

Pam17, that is a very well presented post. Well done.

Can I just mention that the employer has to provide the form P60 by the 31st May so the OP should be able to sort everything out in June.

Elaine

mel36

Hi,

I have just had a letter from HM Customs about underaid tax year 2008/2009.
I had a look at that year as i keep a diary and it was a year i had assigned myself to 3 job agencies, i worked for one agency for a few weeks, covering for someone on sick, after that i then went with another agency and covered for a week, after that i then got a 3 month placement within that same agency, after the 3 months were up i had to look for something else, i found more work with the third agency which then led on to a permanent job which i still have.

I presented each with P45 so not to lose money etc and end up with underpayment of £334, i have looked for all the wage slips i have found them for the last agency but it appears the first 2 agencies have never sent me any or P60'S, i have contacted them and explained my situation and they will try and sort it out.

I have a friend who works within the Revenue who is willing to look into it for me, i think its disgusting that this has happened un beknown to me who does not earn a great amount.

chrismac1

You'll only get a P60 from an employer you still work for at the 5 April - the end of the tax year. So the first 2 agencies should have sent you a P45 but not a P60. I suggest you post up the details on here from the P45s and P60 as follows:

Gross Pay for PAYE
Tax paid
Tax code

Then we can let you know if the calculation is right, at least. After that your next action depends on whether it's right or not - as a rule of thumb it seems that for about 50% of posts on here the HMRC calculation is correct, and it's wrong for the other 50% - often wildly wrong with schoolboy errors featuring.

nikki1520

Please bear in mind that your friend will be sacked for gross misconduct if they access your tax records without a valid buisiness reason and get found out- and even if they had one, they should get straight out as soon as they realise they know you personally.

It's very easy these days to see who has looked at which records - I'm sure you don't want your friend to lose their job.

KevinM26

:mad:unpaided Tax From 2001 / 2002

Hi

Back in 2001/ 2002, I was working for a charity. Come the April of 2001, I had a new pAYE Tax code which I give to my employer. However, they failed to upgrade their spreadsheet or whatever. In June 2002 I was made redundant, but a few months later I got another job. Then in the November 2003 I went of sick. On 17th May 2004 I had a letter from HMRC saying that I has underpaid income Tax in 2001/2002 of about £1500. I rang them up to try and sort it out, saying as far I as knew I was paying the right amount of Tax, via PAYE. I left that employment beuse of ill health.

Then in March 2008 I went back to work part time. Then in Feb 2009 I got a P800 for the Outstanding of tax from 2001/2002. i agreed to pay it off over 2 years, as if they tok it over the year it wouldn't be worth going to work. Then this last tax year they didn't collect it. As this has been ging on for over 9 years can they still claim it ?

Cheers