Ex employer using NI number

Tracyb82

Hello,
Posting on my sisters behalf. She has recently found out that her ex employer continued to use her details after she left work a year ago. She repeatedly asked for her p45 and it wasn't given and as a result was on an emergency tax code in her new job. A bill arrived from HMRC and she has been told they have amended her tax code for her to pay this bill.
She sent them a letter stating she hasn't worked there and where she did work since.
They said there's nothing they can do. Basically her word against her former employer.
Any advice? She has made an appointment with citizens advice in the meantime.

sangie595

A bill for what? If she was PAYE then the employer could only have recorded her as having tax deducted from her wages. So there wouldn't be any bill. What possible benefit could the employer have had, since, if they failed to pay PAYE tax, it would be them that owed the tax money and not her.

gettingtheresometime

Did your sister fill in a starter checklist which replaced a P46?

badmemory

Surely the bill will be for the loss of personal allowance on the actual job plus any tax that may then have been at 40%.

Was the ex-employer a small business or more probably have a manager running it not an owner? Someone has been putting the nett pay in their pockets, maybe not even realising that the chickens will come home to roost.

So questions for the OPs sister, would the owner of the business be involved enough to know that they were paying someone who was no longer actually employed? Did she change her bank account at the same time as she changed her job? If so, has she checked to make sure the pay hasn't still gone into that account? Someone from inside the company could be defrauding them, it could be their accountants/payroll providers or they could be just too stupid to notice they are still paying her.

Whilst this won't solve her problem, it could at least point her in the right direction.

Alternatively of course they could have "stopped paying" someone who is still working for them. No actually but have deleted their NI no & used hers in error. Never underestimate the stupidity of "computer says".

sangie595

badmemory wrote: »

Surely the bill will be for the loss of personal allowance on the actual job plus any tax that may then have been at 40%.

Was the ex-employer a small business or more probably have a manager running it not an owner? Someone has been putting the nett pay in their pockets, maybe not even realising that the chickens will come home to roost.

So questions for the OPs sister, would the owner of the business be involved enough to know that they were paying someone who was no longer actually employed? Did she change her bank account at the same time as she changed her job? If so, has she checked to make sure the pay hasn't still gone into that account? Someone from inside the company could be defrauding them, it could be their accountants/payroll providers or they could be just too stupid to notice they are still paying her.

Whilst this won't solve her problem, it could at least point her in the right direction.

Alternatively of course they could have "stopped paying" someone who is still working for them. No actually but have deleted their NI no & used hers in error. Never underestimate the stupidity of "computer says".

But none of that would explain why HMRC says she owed them a bill. If someone had walked away with the net pay, the tax would still have been due to be collected by the employer, and with live updating systems in place now, that would simply be an amount of money the employer owes HMRC - not her personally. I can totally get someone, deliberately or in error, still paying the employee or someone purporting to be them, but I'm struggling to understand why the tax wouldn't have been paid automatically on the wages, and how, with live updates, it's taken so long. Not being given a P45 shouldn't explain how this could occur - lots of people never see their P45s.

Xbigman

I did see something like this once but it was obvious what had happened and was quickly corrected. Someone left the company but an employee with a similar name was issued a P45 and leaving letter. This was corrected on site within hours but payroll took 6 weeks to sort out their end.
If allowed to continue the one who left would in theory have had two incomes and would therefore have owed tax even if on emergency tax in their new job. Thats the only explanation that fits if the OP's information is correct.


Darren

badmemory

sangie595 wrote: »

But none of that would explain why HMRC says she owed them a bill. If someone had walked away with the net pay, the tax would still have been due to be collected by the employer, and with live updating systems in place now, that would simply be an amount of money the employer owes HMRC - not her personally. I can totally get someone, deliberately or in error, still paying the employee or someone purporting to be them, but I'm struggling to understand why the tax wouldn't have been paid automatically on the wages, and how, with live updates, it's taken so long. Not being given a P45 shouldn't explain how this could occur - lots of people never see their P45s.

The bill (in this case) is caused mainly by the personal allowance being used twice by both "employers" plus half of anything that then becomes payable at 40% as it would only have been paid at 20% - as in extra tax due*. I did say never underestimate the stupidity of computer says, unfortunately this also applies to those who don't get the basics of their job right.

*eg 6 months in new job not removed from old job = half of 11500 (personal allowance) at 20% due to HMRC = £1150 tax due. A very unpleasant shock. Of course the employee that they have deleted has lost a years NI & pension incl state & if they need to claim for unemployment or sickness will not be eligible. So the ex-employer has put 2 people up **** street. If the company goes into liquidation the other person will not get redundancy money & the list goes on.

sangie595

badmemory wrote: »

The bill (in this case) is caused mainly by the personal allowance being used twice by both "employers" plus half of anything that then becomes payable at 40% as it would only have been paid at 20% - as in extra tax due*. I did say never underestimate the stupidity of computer says, unfortunately this also applies to those who don't get the basics of their job right.

*eg 6 months in new job not removed from old job = half of 11500 (personal allowance) at 20% due to HMRC = £1150 tax due. A very unpleasant shock. Of course the employee that they have deleted has lost a years NI & pension incl state & if they need to claim for unemployment or sickness will not be eligible. So the ex-employer has put 2 people up **** street. If the company goes into liquidation the other person will not get redundancy money & the list goes on.

I'd totally agree on the stupidity of computers. But here's the thing. This is now on live updates. So the former employer continues to "pay" them, whatever that means, and pays the tax as notified by the live updates. Because if they don't, it's themthat owes the tax, not the employee. That's how PAYE works. The new employer logs on to live updates and records their new employee and enters their new employees details. That system recognises that the person has two incomes and taxes them accordingly. So where did the bill come from? It would appear the debt is the other way around. The person would be over taxed, not undertaxed?

Tracyb82

Thank you for your replies. I clarified this today with my sister. She worked in a bar. She was never ever paid via her bank account, always in a brown envelope, never received one single payslip in her time there. I don't know how she could be so naive to let them do that.
She left in February last year. HMRC were able to tell her that her details were used again from June to September and she did indeed receive a bill. After a phone call with HMRC yesterday they have amended her tax code to pay this outstanding amount.
Legally I have no idea how to help her. Basically HMRC have said it's her word against the employer. It would be my opinion that they did indeed deliberately use these details but that's another debate.

badmemory

sangie595 wrote: »

I'd totally agree on the stupidity of computers. But here's the thing. This is now on live updates. So the former employer continues to "pay" them, whatever that means, and pays the tax as notified by the live updates. Because if they don't, it's themthat owes the tax, not the employee. That's how PAYE works. The new employer logs on to live updates and records their new employee and enters their new employees details. That system recognises that the person has two incomes and taxes them accordingly. So where did the bill come from? It would appear the debt is the other way around. The person would be over taxed, not undertaxed?

Their personal allowance has been used twice - even if the employer has paid the tax they have calculated as due, the personal allowance has been used twice. Therefore for every duplicated month the person would owe £11500/12 multiplied by .2. Which is almost £200 for every month it happened. £2300 for a full year. That is without it sending the annual income into the 40% tax rate.

The new system is obviously what has now caught up and is causing this to happen - HMRC finding the problem is not an instant thing. Most issues only seem to be found 4 years down the line.

seatbeltnoob

HMRC is hugely understaffed. But once you get through to the right person they can help you. Just hang in there and dial away until you get through to the right person who can sort this out for you.


It's a common tax scam by small businesses to have people on payroll just below the NI threshold so they can lower their corporation tax liabilities. Not saying this is the case - could be innocent. But if a company has phantom people on their payroll then HMRC should be very interested in checking the accounts