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MSE News: Millions to repay tax after HMRC errors

edited 30 November -1 at 1:00AM in Cutting Tax
17 replies 4.3K views
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  • Game_OverGame_Over Forumite
    119 posts
    chrismac1 wrote: »
    Aquamania,

    I have never before processed a tax code which was not on a P6. But the system is in meltdown. Also, I am filing these codes every month via RTI so HMRC get an opportunity every month to raise this issue. There is no point in me giving someone an extra £6k in tax-free pay, only to have HMRC hound the guy in 2 years' time for the underpayment of tax.

    RTI is real-time information only for the people submitting it. For HMRC it is "same old same old" muck-ups and taking years to process the stuff properly.

    Irrespective of your well meant intentions, and with respect, it is not your role as employer to decide how much tax your employees should be paying, except in strict accordance with the information provided to you by HMRC.
    As Aquamania says, employers are not given any breakdown of the tax code they are told to use by HMRC for each employee.

    Acting other than in accordance with the direction given by HMRC (no matter whether you believe them to be in melt-down or otherwise) could leave you open to either an allegation of illegal deduction from the employees wages or leave you as employer liable for any shortcomings in tax paid as the case may be.

    If you want to assist your employee, and feel certain they are underpaying tax, and your employee agrees with your assessment, then why not suggest paying the money that you think should be being paid to HMRC into a separate savings account in the name of the employee, so that if a tax demand does eventually arrive, the employee has the money available. At least that way, the employee will benefit from any interest earned on the money in the meantime ... and more importantly does not leave you as employer open to possible allegations of mal-practice.
  • chrismac1chrismac1 Forumite
    2.6K posts
    I'm an accountant not the employer. With all respect, you seem to have no clue just how bad the situation is. I've discussed this on the phone with HMRC staff on a recorded telephone and they are fine with it.

    These tax codes are so wrong a blind man could see they are wrong, so long as the blind man was not working for HMRC's IT department.
    Hideous Muddles from Right Charlies
  • chrismac1chrismac1 Forumite
    2.6K posts
    If Real Time Information is to mean anything other than a whole load of idiotic fines come October which will in turn completely clog up HMRC with appeals, and then the tribunals if HMRC are stupid enough not to accept the appeals,

    Then

    RTI must work both ways. HMRC are getting this stuff every month. We are now in month 3, there is no excuse for them not taking the month 3 data and sorting out all the silly codes with company cars from 2 years ago and all the rest of it.
    Hideous Muddles from Right Charlies
  • edited 21 June 2014 at 2:16PM
    Game_OverGame_Over Forumite
    119 posts
    edited 21 June 2014 at 2:16PM
    chrismac1 wrote: »
    I'm an accountant not the employer. With all respect, you seem to have no clue just how bad the situation is. I've discussed this on the phone with HMRC staff on a recorded telephone and they are fine with it.

    These tax codes are so wrong a blind man could see they are wrong, so long as the blind man was not working for HMRC's IT department.

    So you are a payroll office providing services to an employer and you are messing about with their employees tax codes??? :eek:

    That's arguably worse!

    However, as you have specific, individual confirmation from HMRC that you may use different tax codes to those provided to the employer, then I suggest you carry on.

    My comments are obviously aimed towards all those that do not have the individual confirmation to the contrary that you claim to have.

    Not sure why HMRC didn't just issue a new tax coding? That's what they usually do where an error has been identified to them, and it only usually takes a few days, even during the current melt-down you talk about.
  • received a tax demand this morning for just short of £4000...

    don't worry, I knew it was owed as they've been paying us child benefit past two years but not taking it back. Issue apparently lies in the 'short tax return' - they said as long as you do a tax return it will be claimed back in my tax code, but apparently this doesn't apply to the short version. Despite them knowing I am receiving the benefit (my income varies so no point asking for it to stop being paid) and having my tax return details each year, no link was made to take it into account - the full tax return apparently has a tick box (how was I supposed to know that ??)

    as I say, not a worry for me as I was well aware I would have to return it so the money's waiting, but I wonder how many others have not ticked the box and are in for a nasty surprise ? and if they don't do the tax return, will it ever be identified by the revenue ? I'm just one of millions...
  • sherambersheramber Forumite
    8.5K posts
    Sixth Anniversary 1,000 Posts Name Dropper
    ✭✭✭✭
    dillydilly wrote: »
    received a tax demand this morning for just short of £4000...

    don't worry, I knew it was owed as they've been paying us child benefit past two years but not taking it back. Issue apparently lies in the 'short tax return' - they said as long as you do a tax return it will be claimed back in my tax code, but apparently this doesn't apply to the short version. Despite them knowing I am receiving the benefit (my income varies so no point asking for it to stop being paid) and having my tax return details each year, no link was made to take it into account - the full tax return apparently has a tick box (how was I supposed to know that ??)

    as I say, not a worry for me as I was well aware I would have to return it so the money's waiting, but I wonder how many others have not ticked the box and are in for a nasty surprise ? and if they don't do the tax return, will it ever be identified by the revenue ? I'm just one of millions...


    The guide to filling in the short tax return states


    Paper filing
    If you decide to file your return on paper, first of all please check whether
    you can use the Short Tax Return. Based on our records for you, we think
    you will be able to use this form, but it is up to you to make sure that you
    can – so please check the list below before completing the form.

    Who cannot use the Short Tax Return?
    You must
    not
    use the Short Tax Return if, in the year 6 April 2013 to
    5 April 2014, you:




    were liable to the High Income Child Benefit Charge. For more information
    go to
    hmrc.gov.uk/childbenefitcharg
  • SpidernickSpidernick Forumite
    3.8K posts
    ✭✭✭✭
    I had a classic coding notice today for a 40% taxpayer with no PA (due to level of income). It had by far the largest K code I had ever seen, with a huge deduction in the tens of thousands. I struggled to work out what had happened and then realised it was to do with a VCT claim on the 13/14 tax return.

    Assuming that the individual would make a large VCT investment each year was one thing (which isn't the case), but that wasn't all. The code put in an adjustment to allow for the 30% restriction on VCT relief, but then didn't give any credit for the investment itself, hence the ridiculous K code. You really couldn't make it up!
    'I want to die peacefully in my sleep, like my father. Not screaming and terrified like his passengers.' (Bob Monkhouse).

    Sky? Believe in better.

    Note: win, draw or lose (not 'loose' - opposite of tight!)
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