HMRC Tax and Employment Benefits

Amyx_2

Hi All, (sorry I am new and posted this to the wrong place originally)

I am looking for some help regarding HMRC Tax and Employment benefits.

HMRC No longer class resident caretakers living on site as exempt from 2010-2011. I did not know this until I received a letter stating I am now due nearly £9000.00 to HMRC. I have contacted my employer but they're not interested and said this must be paid by me. Surely when HMRC changed this they informed my employers and expected them to deduct my wages accordingly? I find it very unfair that I have been left with this huge amount of money to pay back and my employers who obviously created this mess have washed their hands.

Is their anything I can do? Would HMRC give my employer any prior knowledge of this change to policy either before the change or after? PAYE is out out of my hands and dealt with by them payroll, I believe they should be held accountable for this.

Any help would be appreciated.

Thanks in advance

antrobus

See this thread here

https://forums.moneysavingexpert.com/discussion/4932467

OP is asking about the impact of the following;

Recent changes to employment law and practice have in a number of cases removed the requirement for resident caretakers and resident wardens of sheltered housing schemes to be on call outside normal working hours. HMRC therefore no longer accepts that these types of employee automatically come within the exemption in Section 99(1) ITEPA. This change applies to resident wardens for tax years 2006-07 onwards and to resident caretakers for 2010-11 onwards.

http://www.hmrc.gov.uk/manuals/eimanual/eim11342.htm

WestonDave

What would normally happen is that for 2010/11 despite the change no changes would be made to payroll. At the end of 10/11 your employer should have included your now taxable benefits on a P11D and submitted it to the Revenue - this can be as late as mid May. Once processed HMRC would either send a demand for the unpaid tax and code that amount into the 11/12 code, or if the unpaid amount was low enough to collect via coding change the 11/12 coding to take 2 lots (one for the arrears and one for that years ongoing amount). There may still end up with a small adjustment at the year end if the benefit changes slightly. What your employer cannot do is suddenly on 6th April 2010 recognise the change and start deducting tax without it being coded by HMRC. Employers simply cannot just deduct tax because they think it is due - it must be in compliance with an issued tax code.


The question here is that it looks like you've got a number of years into this revised policy without this being picked up - maybe the employer wasn't aware of the change so didn't put it on a P11D and its now been picked up. They've possibly got fined for that. However despite the inconvenience the bottom line is that the tax is payable and payable by you - its possible the employer acting properly could have made it more convenient but that doesn't make the liability theirs.


I would go back to HMRC and ask why so much in one go - is it because P11D's weren't done and its now been picked up. Assuming that might be the case you probably have justification to use to ask for time to pay given that it would otherwise have been paid through wages from 2011/12 onwards.

purdyoaten

WestonDave wrote: »

What would normally happen is that for 2010/11 despite the change no changes would be made to payroll. At the end of 10/11 your employer should have included your now taxable benefits on a P11D and submitted it to the Revenue - this can be as late as mid May. Once processed HMRC would either send a demand for the unpaid tax and code that amount into the 11/12 code, or if the unpaid amount was low enough to collect via coding change the 11/12 coding to take 2 lots (one for the arrears and one for that years ongoing amount). There may still end up with a small adjustment at the year end if the benefit changes slightly. What your employer cannot do is suddenly on 6th April 2010 recognise the change and start deducting tax without it being coded by HMRC. Employers simply cannot just deduct tax because they think it is due - it must be in compliance with an issued tax code.


The question here is that it looks like you've got a number of years into this revised policy without this being picked up - maybe the employer wasn't aware of the change so didn't put it on a P11D and its now been picked up. They've possibly got fined for that. However despite the inconvenience the bottom line is that the tax is payable and payable by you - its possible the employer acting properly could have made it more convenient but that doesn't make the liability theirs.


I would go back to HMRC and ask why so much in one go - is it because P11D's weren't done and its now been picked up. Assuming that might be the case you probably have justification to use to ask for time to pay given that it would otherwise have been paid through wages from 2011/12 onwards.

Excellent post - just one thing though i.e the highlighted bit. HMRC cannot, if they discover an underpayment for an earlier year (in this case, discover a 2010/11 underpayment in 2011/12) code it out in the discovery year. It would have to be coded in 2012/13 - those are the rules! It just means that arrears of tax mount up though!

Amyx_2

Hey, thanks very much for your replies.
This amount is due from 2010-2011 and just picked up on now. Which is why the amount is so much. If they had started deducting this in 2011-2012 the year after it changed it wouldn't be so bad. Would I be able to fight this under the employer errors in deduction of pay as you earn tax?

Thanks again guys.

LittleVoice

antrobus wrote: »

See this thread here

https://forums.moneysavingexpert.com/discussion/4932467

OP is asking about the impact of the following;

Recent changes to employment law and practice have in a number of cases removed the requirement for resident caretakers and resident wardens of sheltered housing schemes to be on call outside normal working hours. HMRC therefore no longer accepts that these types of employee automatically come within the exemption in Section 99(1) ITEPA. This change applies to resident wardens for tax years 2006-07 onwards and to resident caretakers for 2010-11 onwards.

http://www.hmrc.gov.uk/manuals/eimanual/eim11342.htm

So, for the OP, is it actually the case that you are not required to be on call outside normal working hours?

That is, is the tax being requested correctly?

WestonDave

Amyx wrote: »

Hey, thanks very much for your replies.
This amount is due from 2010-2011 and just picked up on now. Which is why the amount is so much. If they had started deducting this in 2011-2012 the year after it changed it wouldn't be so bad. Would I be able to fight this under the employer errors in deduction of pay as you earn tax?

Thanks again guys.

You can have a go, but in reality I would think it very unlikely - the employer errors relief is very limited - I don't think you can argue that the employer acted outside good faith so the only potential failing that is on their list which might fit the bill is if there was something in a 2010/11 employer bulletin regarding changes to treatment of your housing which they ignored. Those aren't available online anymore so you'd need to obtain them somehow and see if anything was in there.


However might be worth putting an objection to HMRC in writing on the grounds that it should have been put on a P11D by the employer in 2011 and as such is an employer error. Don't hold out much hope though - subject to the valid points made above as to whether this does in fact apply to you, if its taxable, then tax is due and it should come from you, whether late or not.

Amyx_2

Littlevoice: if there is something going on in the building I will deal with it at anytime of day, if it isnt during my notmal working hours i get paid overtime for it

I'm going to write a letter to HMRC and see what happens. I can't make things any worse than they already are.

Thank you all very much again.

Savvy_Sue

I defer to all the more knowledgeable posters here, BUT I thought that if an employer made an error, they could not recover the tax from the employee in a subsequent tax year.

So IF the employer failed to submit P11Ds for several years running, then the liability would fall on the employer for all previous years.

In our case, our payroll co. set up some pensions incorrectly: they were stakeholder not company pensions, so tax was underpaid for two years before this was noticed. I spoke to HMRC to ask how to deal with it, and their advice was that the tax had to be paid (and they told us how to do it), but it could not be recovered from the employees for anything but the current tax year.

Now, maybe P11Ds are different, but ... did something change in the last couple of years to mean that the liability does now fall on the employee if the employer gets it wrong?

xylophone

http://www.hmrc.gov.uk/thelibrary/tax-paye/employer-errors-deduction-paye.pdf

Employer errors in deduction of Pay As You Earn tax

The above might be worth a look.