Employer failed to deduct enough income tax...

xtheonex

Hi
I wonder if anyone has any experience with my situation.

The simple version is - a previous employer didn't deduct enough income tax from me and now HMRC want me to pay it.

The long version is - I recently started my own company and as such the HMRC obviously requires me to submit a self assessment tax return for the 2017-2018 tax year.
In the 2017-2018 tax year I started working for Company 1 and left that company in approx June 2017.
I then started working for Company 2 and left that company in March 2018.
I then started my own company in April 2018.
When filling out my tax return the self assessment calculation showed I owe almost £1000 in underpaid tax for that period.
For both Company 1 and Company 2 I was in the higher tax bracket and I have checked both P45s and from a rough calculation it appears that Company 1 deducted approx 13.5% of my income for tax where as Company 2 deducted approx 23% for tax so it's clear (to me at least) that Company 1 is to blame for this?

My question I guess is do I have any legal recourse to get Company 1 to pay the tax?
Now obviously I know the tax should have been paid by me in the first place but one would assume that as I have no control over how their payroll calculated my pay / tax I shouldn't be responsible for HMRC now demanding nearly £1000 in outstanding tax?

Does anyone have any experience / insight to help answer my question?

Thanks in advance,
Dave

Gavin83

You said it yourself, the tax should have been paid by you originally. You won't be any worse off in paying it and you'll be considered at least as responsible to ensure you're paying the correct tax. Basically you need to pay this and you have no claim against your original company.

Dazed_and_confused

Have you checked that you actually completed the return correctly?

You are definitely making too big an assumption about employer 1 being the source of the problem.

What tax code were you issued with for 2017:18 and did each employer use this code number?

You really need to post some actual income details for anyone to give more meaningful help. The Self Assessment calculation would also really be needed.

Takeaway_Addict

xtheonex wrote: »

Hi
I wonder if anyone has any experience with my situation.

The simple version is - a previous employer didn't deduct enough income tax from me and now HMRC want me to pay it.

The long version is - I recently started my own company and as such the HMRC obviously requires me to submit a self assessment tax return for the 2017-2018 tax year.
In the 2017-2018 tax year I started working for Company 1 and left that company in approx June 2017.
I then started working for Company 2 and left that company in March 2018.
I then started my own company in April 2018.
When filling out my tax return the self assessment calculation showed I owe almost £1000 in underpaid tax for that period.
For both Company 1 and Company 2 I was in the higher tax bracket and I have checked both P45s and from a rough calculation it appears that Company 1 deducted approx 13.5% of my income for tax where as Company 2 deducted approx 23% for tax so it's clear (to me at least) that Company 1 is to blame for this?

My question I guess is do I have any legal recourse to get Company 1 to pay the tax?
Now obviously I know the tax should have been paid by me in the first place but one would assume that as I have no control over how their payroll calculated my pay / tax I shouldn't be responsible for HMRC now demanding nearly £1000 in outstanding tax?

Does anyone have any experience / insight to help answer my question?

Thanks in advance,
Dave

Ultimately you are responsible for the tax you pay, the employer is just the collector of the money.


So no- No recourse.

comeandgo

An employer uses the tax code that HMRC advises them to, using the information you have given HMRC. Your tax code is your responsibility, you have to pay the tax.

xtheonex

Thanks for the response.

I doubt I can get this self assessment wrong?! During the 2017-2018 tax year I only had income from 2 jobs and both of those were full time employment on the PAYE payroll so essentially all I have to do is enter the "total income" and "total tax" figures from both my P45s and that's it right?

Both employers used the same tax code (1150L) and at both roles I was in the higher tax bracket.

In terms of figures from the P45...
Company 1 - Total Pay 11,753.02 - Total Tax 1,583.02
Company 2 - Total Pay 53,579.68 - Total Tax 12,260.54

Thanks again,
Dave

Dazed_and_confused wrote: »

Have you checked that you actually completed the return correctly?

You are definitely making too big an assumption about employer 1 being the source of the problem.

What tax code were you issued with for 2017:18 and did each employer use this code number?

You really need to post some actual income details for anyone to give more meaningful help. The Self Assessment calculation would also really be needed.

xtheonex

In theory that should be correct but as an employee one has no responsibility for calculating tax or paying it even if one wanted to.

comeandgo wrote: »

An employer uses the tax code that HMRC advises them to, using the information you have given HMRC. Your tax code is your responsibility, you have to pay the tax.

xtheonex

Your theory that I wouldn't be any worse off isn't strictly true because although last year I paid less tax because of someone elses mistakes, this year I'm expected to pay the outstanding tax from last year plus this years taxes. It's especially painful this year as I mentioned I've left my higher rate tax paying role to start my own company where I'll be lucky if I even pay lower rate tax in the first year.
It doesn't seem fair though does it?! As an employee one has no responsibility for calculating tax or paying it even if one wanted to.

Thanks,
Dave

Gavin83 wrote: »

You said it yourself, the tax should have been paid by you originally. You won't be any worse off in paying it and you'll be considered at least as responsible to ensure you're paying the correct tax. Basically you need to pay this and you have no claim against your original company.

molerat

Tax on job 1 is correct for a July pay date.

shortcrust

Mistakes happen. If a company accidentally pays you too much salary you have to pay it back (as is endlessly discussed on here) even in circumstances that can seem very unfair. This is no different.

Merlin139

If you say company 1 made the mistake then company 2 should have corrected the mistake.

The P45 from company 1 will have shown the details of your earnings up to a set date. Company 2 then take over controlling how much tax you have paid. Any previous tax paid will then have an effect on what you pay with company 2 as the figures should be recalculated each month.

What I cannot quite understand is that if you now work for yourself you obviously are not working that hard if you can sit around moaning about the fact that you now have to pay the taxman money that you have always owed them!