HMRC Messed Up, I have to pay?

MCam

So a bit of background info. I got a later a few months ago stating that I had underpaid tax. After doing a bit of a research, provided that I had supplied all of the required information, I shouldn't have to pay it back. I gave my employer my P45 from my previous job, which I believe should be all that is required (I don't receive income from any other sources).

I've now had this letter back. It appears that HMRC are saying that they failed to provide my employer with an emergency tax code so my employer isn't liable, fine, but it's still not my fault?

Can anyone advise on how I proceed from here, or am I stuck with having to pay it back? I've just received a promotion at work, and this tax error cancels out my pay rise and then some... :sad:

jem16

MCam wrote: »

So a bit of background info. I got a later a few months ago stating that I had underpaid tax. After doing a bit of a research, provided that I had supplied all of the required information, I shouldn't have to pay it back. I gave my employer my P45 from my previous job, which I believe should be all that is required (I don't receive income from any other sources).

I've now had this letter back. It appears that HMRC are saying that they failed to provide my employer with an emergency tax code so my employer isn't liable, fine, but it's still not my fault?

Perhaps you can shed some light on how the underpayment happened?

The letter suggests that your employer said they didn't get a tax code of BRX and HMRC say they can't find any record if this code being issued.

However why, if it's your only income, would a tax code of BRX be issued as that's normally a tax code where there is more than once income.

So basically why did the underpayment happen and why do you believe HMRC messed up?

MCam

Thanks for the reply. This was after I switched jobs in December 2013.

The very first month there I got no tax at all, so I raised it with my employer who said they'd not received a tax code from HRMC, but they'd manually adjust the tax to pay it back (that 1 month of no tax still doesn't equate to the amount HMRC are claiming back though. They're after around 8% of my total salary).

Out of interest, how can you find out what the various tax codes mean? I tried searching for BRX but came up empty. It sounds like you're saying this is the wrong tax code anyway?

boo_star

https://www.gov.uk/tax-codes/letters-in-your-tax-code-what-they-mean

In this case I believe they meant BR with the "x" denoting a wildcard.

jem16

MCam wrote: »

Thanks for the reply. This was after I switched jobs in December 2013.

The very first month there I got no tax at all, so I raised it with my employer who said they'd not received a tax code from HRMC, but they'd manually adjust the tax to pay it back (that 1 month of no tax still doesn't equate to the amount HMRC are claiming back though. They're after around 8% of my total salary).

The problem that occurs when you move jobs is that in one month it's possible to have two payslips - one from the old employer and one from the new employer. This can mean that each job taxes you correctly based on the amount you are paid but as both used your tax code then you received two sets of allowances where you should only have got one set. This often results in an underpayment but no-one is to blame. HMRC would then issue a new tax code but probably a non-cumulative one as a cumulative one would have seen a large amount of tax taken in one month. Instead they leave it to reconcile at the end of the tax year and then they code out the underpayment for a future tax year so that you pay it back over one whole year than just one month.

Although you handed in a P45 it is possible it wasn't used for the first pay as there simply wasn't enough time so the underpayment was unavoidable.

Out of interest, how can you find out what the various tax codes mean? I tried searching for BRX but came up empty. It sounds like you're saying this is the wrong tax code anyway?

The actual tax code is BR which means all of your pay is taxed at basic rate with no personal allowance. This is normally given in the case of a second employment but in your case is probably the only code that would have avoided the underpayment. However it wouldn't be used normally for a change of jobs where you told the new employer that this was your only job now so the employer is not to blame as it sounds like they probably used the emergency tax code whilst waiting on HMRC to issue a new tax code.

HMRC aren't to blame either as it takes time for the information to get passed onto them. It's just one of those things that can happen when you change jobs even though everything has been done correctly.

As to the X it simply means that the tax code would be used on a non-cumulative basis and your pay looked at each month in isolation as opposed to looking at the whole picture over the tax year.

As to the amount, you should be able to check the figures from your P60 and P45. If it's correct then you owe the tax and it's not really anyone's fault.

chrisbur

The only way to get any idea of what has happened is if you give full details.

From the P45 part 1A every thing from sections 6 7 and 8 if anything is blank say so.
From all payslips from new employer taxable gross, tax paid, tax code/basis, month number, taxable gross to date, tax paid to date, previous gross and previous tax.
Full details of tax owed calculation from HMRC letter.

jem16

chrisbur wrote: »

From all payslips from new employer

It might also help to know if there were two payslips during the same month, one from each employer.

MCam

Hrmm ok. Thanks everyone for your replies.

It looks like I might have to just suck this one up and put it down to experience. I'll check the figures from the relevant forms and see if I can work out what has happen.

Thanks again folks.

chrisbur

jem16 wrote: »

It might also help to know if there were two payslips during the same month, one from each employer.

Comparison of P45 details and payslip details from new employer would show if that had occured.
But looks like the OP does not want to give the details.

FBaby

The exact same thing happened to me. The tax office made it clear that in the end, it was my responsibility to check my tax codes and whether they were applied correctly. I agree with this, wished it was easier to comprehend though! They did adjust my new tax code though so I paid it back as a monthly deduction from wages.

A similar error took place again after I moved jobs again, but this time, I made sure to get it sorted immediately. I found the tax office very cooperative and made adjustments immediately so I wouldn't end up with another under payment.