P800 Tax underpayment enquiry

AndreasMacklemore

Hi folks,

Wondering if anyone can advise.

I have always been a permanent employee through several companies and thus paid tax via PAYE and NI automated route through my monthly payslips.

On 31st March 2014, I officially ended my employment with Company X and so I had received my final salary etc..

I joined Company Y around a week later around 7th April 2014, and so filled out the usual P46 tax form at that time stating this was my only job. Subsequently I forwarded my P45 to the new Company (company Y), so that the relevant tax codes could be adjusted, which the whole time I thought had been.

Although I had left Company X by March 2014, I was still eligible to the yearly bonus payment, which was issued to me in April 2014. I saw the payslip for this, noticed tax had been deducted, and thought nothing more of it.

This particular bonus has now caused me an issue and Inland Revenue to send me a P800 saying I have underpaid by £700.
Apparently to them, this classes as 2 forms of employment, and they only deducted 20% of the bonus, and the new salary from Company Y.
On questioning it, they said I should ticked option B on the P46, along lines of this is my only job but I've had another job in this new tax year. At that time, I would not have considered this to be the true case, as in my eyes I had officially left my contracted employment with my previous company.
But Inland Revnue saying its my fault, as my old company were told to deduct lower tax on the lower rate based on Inland Revenue's instructions.

Any views here? Do I have any basis to stand my ground here, or does the bottom line stand that it is still an underpayment, and thus it needs to be paid

thanks for your help

Darksparkle

I don't agree with their opinion on the P46 but do agree that you need to repay any underpaid tax. Although it may not be your error, simply just how the system works, the tax is still your responsibility.

laticsforlife

Because they paid the bonus in April it became income of the later year (presume the payslip said month 1 on it), so whilst you weren't 'employed', you did get income, so add that to your Y income and tax that, and it seems you underpaid ([presumably because the bonus and your Y income is over the HR threshold and as you say they only deducted LR tax (as that's all they knew to do).