Liability for payroll error?

snowsuit

I'm not sure if this is in the right place, sorry if not!
trying to keep a long story as short as possible:

I was self-employed up until Feb 2012. I then started working as an employee (but maintained self-employed status, as occasionally I do get called on by old clients to do a tiny bit of freelance work).

I worked as an employee (on a contract) from Feb 2012-Feb 2013. During this time my student loan repayments were taken out of my income. i then was forced to take a 6-week 'contract break' (ie, let's-avoid-EU-law break) and was rehired by the same company on the same terms in April 2013. I've worked there ever since.

At the time I left on my 'break' the company moved to a new online payroll system which I was unable to access through my work computer when I returned. I tried all 3 browsers I have, and also tried my home computer. i let payroll know about this when I needed to access my p45, and got a 'oh, we'll have to sort that out at some point, there's lots of people who can't get into it', and they emailed me the p45 as a pdf. i then had an issue earlier this year where i checked my bank account and noticed that one pay cheque seemed short. again, i couldn't view it online, and informed payroll of this, and asked them to help me, and they said again 'yes we'll have to look into that', but short of telling me to try a different browser (which I'd done) they didn't have any suggestions. I also asked to have paper payslips again as I couldn't view them under the online system but was told this was against policy.

i'm not doing very well at cutting this short... anyway, the other day i received a statement from the student loans company saying they'd had £0 in repayments for the past tax year. i wasn't particularly worried as i knew that there can a big lag in getting the data from HMRC, but i did want to know exactly how much i still owed (as i thought i was getting close to paying it off entirely) so i called them and was told that this wasn't a lag, they had had the final figures from HMRC and there had been no repayments during 2013/14 - none at all until last month, when they started coming out of my pay again. HMRC told me that when i submit my next tax return, in january, i will be liable for all the underpaid student loan amount - around £2500.

i am really upset about it all and shocked that this can happen. i spoke to the payroll company today and they have sent me an email that says 'this was an error on our part and we sincerely apologise. we should have taken the SLC payments out automatically when you returned to work for us, but for some reason we didn't do this.' however, they said that i am liable for the lump sum that HMRC will demand.

considering they have admitted responsiblity for this, is there any chance that they will have to pay the outstanding money? i looked on the HMRC website and there is no mention of student loans, but it does say that when a payroll company makes an error in NICs they are liable for the underpayment and not the employee. i am devastated about it as i had thought that i was almost free of this debt, and instead i'm going to end up having to put £2500 on a credit card in january.

thanks for reading.

TheCyclingProgrammer

I can't see how the liability could be anyones other than yours. Its your debt I'm afraid. Its unfortunate that your employer's payroll has messed this up but that doesn't make it their liability. Did you really have no way of checking your payslips?

Maybe as a gesture of goodwill your company can provide you with an interest free loan to cover the payment that you can repay back over 12 months (they could possibly deduct this from your salary payment). As the loan is under £10k there shouldn't be any BIK issues.

chrisbur

snowsuit wrote: »

i looked on the HMRC website and there is no mention of student loans, but it does say that when a payroll company makes an error in NICs they are liable for the underpayment and not the employee.

This is not strictly correct. The employer has to correct the underpayment right away but provided HMRC agree they are allowed to collect this underpayment from the employee.

"Sometimes you can recover the amounts the employee has underpaid if you have made an error in good faith, but there are strict rules about when you can do this. You must contact HMRC's Employer Helpline before you recover any from your employee.
If you are able to recover from your employee you need to make sure that both the following apply:
the extra deduction you make is no greater than the employee's NICs due on each payday
you only make extra deductions in the remainder of the tax year in which the error was discovered or the following tax year"
http://www.hmrc.gov.uk/payerti/reporting/errors.htm#2