tax underpayment

il_padrino

Advice please: why should I pay for HMRC/Pension Administrators errors? Last year I received a demand for underpaid tax for year ending April 2012. In that tax year (2011-2012) I was employed part-time (I retired in December 2011) and was also in receipt of 2 small occupational pensions. On enquiring I was told that this was because my employer/pension administrators had all used the full tax allowance resulting in the underpayment. I was also told that because it was my pension administrators error I would not have to pay the tax back. So I forgot about it. However, later on this year I received a new demand for the same underpayment. I wrote to HMRC stating the facts and asking them to write off the tax and recoup the money from my pension administrators because it was their fault. Eventually I got a reply from HMRC telling me that the administrators "used PAYE correctly based on the tax codes they had in operation at the time, my payslips would have shown the tax code being used and that the onus would be on me to check it was correct". HMRC therefore insists that I should pay.

My argument is that 1) I don't receive monthly payslips from my pension providers so I have no way of checking; 2) as a layperson it would be reasonable for me to believe and expect that the experts (HMRC/pension administrators) would be correct; 3) I would have been unable to check the correctness of the payments because communication received from HMRC/pension administrators would contain information supplied by them and believed by me to be correct at the time. I have sent HMRC a letter stating the above. I would be very grateful for any advice on what else should I do or say as this has been going on too long and is causing me stress. Many thanks for your help.

CLAPTON

who told you you would have to pay the tax back?
was it in writing?


maybe we could help better if you tell us about each income for that tax year

-gross
-tax paid
-taxcode

how much do they want back?

Laurajo_2

Unfortunately, hmrc view it as the taxpayers responsibility to check that tax codes are correct (personally, I agree that it is difficult for a layperson, who would assume that hmrc are aware of more than they actually are, to make sure of it).

There is a concession in place where hmrc can decide not to pay, if they have delayed acting on information...have a look at this link:

https://www.hmrc.gov.uk/manuals/pommanual/paye95001.htm

Ultimately, if hmrc decide they want you to pay it, I would take it up with the pension administrator. Who told you it was the pension administrators error and that they would have to pay it? If it was the administrator themselves, you may be able to get them to reimburse you, however i suspect they will only be applying the tax codes which were issued by hmrc...which they are legally obliged to do.

Have you received any PAYE coding notices for your pensions prior to this?

When you retired, did you complete a form p161 detailing your pension income? I seem to think hmrc only send them out when you approaching state pension age, so possibly not.

I would certainly send another letter, give the esc 19 a a shot (see the link above - there are template letters online, too).

xylophone

What did your Notice of Coding for the year 2011-12 say?

il_padrino

Thank you so much Clapton, Laurajo and Xylophone for your replies. I will gather the information and get back to you. :j