Previous employer lied about earnings to HMRC

Nmblefngr

Hello,

I’m seeking some advice on a situation I can’t find much information about.

So I recently started new employment (3 months ago) and after receiving my latest payslip realised that my taxable gross is much higher than I expected.

After contacting HMRC it appears my previous employer has exaggerated my earning with them and also stated that I worked an extra month after I had finished. These exaggerated earning are what is responsible for my higher gross taxable income for this tax year.

I have contacted my previous employer and requested my payslips (which I didn’t receive when employed) for this tax year and also a copy of my P45 that they submitted to HMRC.


I was payed cash at the time of this employment and I am just in need of some advice as to how I go about getting my previous employer to inform the taxman of the true value I earned while employed with them.

I’m welcome to give out further details of the situation if needed. Any advice would be welcomed!

sangie595

If you were paid in cash, what evidence do you have that you were not paid this much? And what benefit is there to the employer in lying about this?

Nmblefngr

Unfortunately I don’t have any evidence but I know I didn’t receive that much. I worked part time while studying, I suppose they may still have the rotas for the time I worked their. Other than that I’m not sure.

From what I understand it would allow them to keep the difference in my true wage to the exaggerated wage as tax free money.

sangie595

Nmblefngr wrote: »

Unfortunately I don’t have any evidence but I know I didn’t receive that much. I worked part time while studying, I suppose they may still have the rotas for the time I worked their. Other than that I’m not sure.

From what I understand it would allow them to keep the difference in my true wage to the exaggerated wage as tax free money.

How does that work? It was their money in the first place, so they would only get to keep money that was theirs already.

Sorry, but if you have no evidence, I can't see that you can do anything. You can try a subject access request for information, I suppose, but that may not get you anywhere - there's really no reason for them to keep the rota...

I think that you may need to chalk this up to experience - they should have provided pay slips, but there nothing you can do about that, and if you have no records of your hours and what you were due to be paid, then you wouldn't have even known whether you were paid correctly or not. I can't see how you will ever prove that they paid you less than they have declared to HMRC. Or why they would do that. And given your lack of any supporting evidence, then it could be you that is wrong! How would you prove you weren't?

Nmblefngr

So to clairify I use to earn around 350 a month cash. My employer has told HMRC that I earned just under 600. This amount of money would not be taxed as it is below threshold. The extra 250
Could be pocketed without having to be taxed as profits or it could be used to pay wages of other full time employees involved ( family members of the owner) who would usually have to pay tax if that money was declared as wages for them. Imagine doing this to multiple part time Employees? You would make a lot of tax free cash.

Also why would my employer tell HMRC that I worked and was payed for the month of July when I had left in June? Even after I handed a notice in.

My only evidence is that I banked May and June’s wages after receiving them as cash.

nicechap

April to June @ £600 pm = £1800,

April to July @ £600 = £2400.

Neither of which would take you over the tax threshold.

The difference between you and your ex-empoyer is £1350 (£250 for Apr to June and £600 for July). So, if you are now in a very high paying job, you would pay basic tax on the £1350 which at 20% is £270. That's your potential loss.

Once you've paid your full tax for the year, you could try suing your previous employer for that but you have no proof that you earned what you say you did, whereas, your employer has if they've told HMRC.

Why did you take a job cash in hand? And never query why you didn't get a payslip? Did you get enrolled in a workplace pension?

Nmblefngr

April = £350
May = £350
June = £350

Is all I earned, they told HMRC I earned £2400 from April to July even though I wasn’t employed for the month of July. So yes I am paying tax on an additional £1350 that I had never received.

When I was first employed by them they originally payed me via electronic payment.

I did query payslips, they always said they had them but never gave them to any of the employees.

No I was not enrolled in a workplace pension.

TELLIT01

Nmblefngr wrote: »

My only evidence is that I banked May and June’s wages after receiving them as cash.

That is not evidence. There is nothing to say how much your employer gave you, and only your word that everything you were given was paid into the bank. You have no hope whatever of 'winning' any claim against the company or of getting HMRC to change the information they are using.

Dazed_and_confused

It might not be the whole answer but if you look at your Personal Tax Account on gov.uk this should show the actual details your old (and current) employer have sent to HMRC.

As TELLIT01 suggests the only way these details can be changed is if your old employer sends new information to HMRC. You will be able to check for this on your Personal Tax Account.

Annoying though it may be another thing to consider is if this will have any actual financial impact i.e. do the apparently overstated wages from the old employer mean you will actually pay more tax than necessary?

steampowered

Nmblefngr wrote: »

The extra 250 Could be pocketed without having to be taxed as profits or it could be used to pay wages of other full time employees involved ( family members of the owner) who would usually have to pay tax if that money was declared as wages for them. Imagine doing this to multiple part time Employees? You would make a lot of tax free cash.

This all sounds very unlikely to me. Payroll is not used to calculate corporation tax.

If the other employees were paid extra money, they would still be taxed on that.

I suspect it is more likely that whoever manages payroll for this company made a mistake. It is surprisingly common for employers to pay people the wrong amounts, or to keep paying people for a month or two after they have left and so on.

This is only worth pursuing if you are out of pocket because you are paying more tax than you need to. If that's the case why don't you try calling HMRC in the first instance and see what they say?

Nmblefngr

How would they be taxed on it if say it was not declared on the payroll system as part of their wage and instead declared as mine and then handed to them as cash?

I don’t understand how people are struggling to understand that this method could be used to fraduantly benefit others. Who don’t declare the entire value of the cash they received for the month.

It was a family run business and I was not on contracted hours, I had a zero hour contract where my hours would change weekly. Due to this every week, the hours had to be manually sent over to the accountant/payroll so I’m not sure how he could of accounted for the hours I apparently worked in the weeks of July. Especially when I’d handed over a written notice of resignation in June.

I have contacted HMRC and they informed me that I would have to get my previous employer to send them updated details of my earnings. Other than that their was not much else they could advise.