Employer mistake on tax - who is liable?

GolfDelta

Hi, I hope this is the right place to post this enquiry?

My brother received a tax demand for £475. HMRC said he had underpaid in the 2010-11 tax year. Both he and I wondered how that was possible when he's PAYE so I wrote to HMRC on his behalf. They've written back now and what they say is that his tax code was wrong because he'd already used some of his allowances with a previous employer for that year.

Is he liable for this when it was outwith his control?

p00hsticks

Did he get a P45 from his previous employer and pass it to his current one ?

Did he check that the current employer was using the tax code he expected ?

GolfDelta

p00hsticks wrote: »

Did he get a P45 from his previous employer and pass it to his current one ?

Did he check that the current employer was using the tax code he expected ?

This I don't know. Knowing the type of man he is I suspect he was trusting his employer's to do what was right for him as personal admin wouldn't be his strongest suit.

chrisbur

One possible explanation for this could be that he filled in a P46 and gave the wrong details so could be his own fault; but without the full details for the year no-one can say for certain who was at fault. To know where the error was you would need earnings and tax details for old job, new job, P45 details, P46 details and P60 details.

GolfDelta

Thank you folks but thankfully I have been able to unearth the answer myself.

The matter falls within ESC A19 and my brother isn't liable.

jem16

GolfDelta wrote: »

The matter falls within ESC A19 and my brother isn't liable.

Your brother would have to prove that ESC A19 applies and that the error is either with HMRC or the employer.

What makes you think it applies? Without the facts that chrisbur has asked for I doubt you could make that assumption.

GolfDelta

jem16 wrote: »

Your brother would have to prove that ESC A19 applies and that the error is either with HMRC or the employer.

What makes you think it applies? Without the facts that chrisbur has asked for I doubt you could make that assumption.

• Because they have demanded an underpayment for the tax year 2010-11. They should have done so in 2011-12.
• Because my brother is PAYE and had a right to expect HMRC to issue the correct tax code.
• Because they did not make use of the facts in their possession to prevent an underpayment occurring.

ESC A19 is clear that all of these apply.

jem16

GolfDelta wrote: »

• Because they have demanded an underpayment for the tax year 2010-11. They should have done so in 2011-12.

Unfortunately that isn't correct. This is the wording;

•Was notified of the arrears more than 12 months after the end of the tax year in which HMRC received the information indicating that more tax was due

Note the bold bit. When was HMRC informed? When was your brother informed of the underpayment?

[*]Because my brother is PAYE and had a right to expect HMRC to issue the correct tax code.

That bit could be argued if your brother did indeed hand in his P45 or complete, correctly, a P46. If he did neither then he could not have reasonably believed his tax affairs were in order so would fail on this.

Because they did not make use of the facts in their possession to prevent an underpayment occurring.

Goes back to my first point. When was HMRC made aware?

ESC A19 is clear that all of these apply.

Unfortunately it is not clear and if you pursue this without the correct facts you and your brother will probably fail.

Perhaps if you can get answers to the questions asked then someone here could help you to make a proper claim if it is warranted.

GolfDelta

Thanks for your comments people. HMRC phoned yesterday. They have accepted my points and written the tax off. My brother is delighted.