HMRC put me on Self-assessment despite being PAYE - now I have penalties?!

Moondreamer

Hi all, 
This is confusing so please bear with me but I need help navigating the minefield that is HMRC self-assessment and filing tax returns, for which I have been issued over £500 in penalties, despite having never been self-employed and always on PAYE. 

So in Feb 2019 HMRC sent a letter to an old address and to my maiden name (I got married in Dec 2015) saying I had an amount of tax outstanding from tax year 2016/17, I have not seen this letter and cannot find it anywhere on my online account which I recently registered for. In August of 2020 I received a letter to my correct address (still the wrong name) saying that I had late filing penalties for year ending 5th April 2018. When I finally received this letter, the first I had physically put my eyes on, I called HMRC helpline and they advised to appeal. I wrote a letter, as the appeal form did not specifically address my personal circumstances. I was employed under PAYE until March 2016 when I moved to Germany with my husband who is in the army. We stayed there until July 2019 when we returned to the UK and I didn't work in that time abroad. I didn't inform HMRC, their own website even says you don't have to. I began PAYE employment again in June 2020, with exactly the same employer as before, which I assume is how HMRC managed to finally get in touch with me. I initially appealed the August 2020 penalty notice and they replied and had the penalties for 17/18 removed but there was now a penalty for an underpayment of PAYE tax from 15/16, first time this had been mentioned. This letter from HMRC, from September 2020, stated that as "HMRC did not receive any response to the Voluntary payment letters issued, you were transferred into Self-Assessment and the Notices to File the tax returns were issued for 2015-2016, 2016-2017, and 2017-2018." They then agreed to removed the tax return late filing penalty for 2017-2018 as I was out of the country and they did not hold any PAYE data for that period. 
Their own advisor on the phone told me only one letter had been issued, as mentioned previously, in Feb 2019. I still don't know how much tax they initially said I underpaid. There is no breakdown, documentation or calculations of this anywhere on my account. I would of course, paid any outstanding tax due from my PAYE employment but I didn't know about it until over 3 years later so now have incurred a ridiculous amount of penalties! The letter from August 2020 says they won't consider any further appeals until I complete my tax returns.
I don't even know what advice I need other than I need help! I'm going to call HMRC after typing this to ask for the original letter which states I have underpaid XXX amount of tax from 2015/16. I don't know how far I'll get but have to start somewhere. 

[Deleted User]

There are many reasons to complete a return, not just because one is self-employed which is a common belief. If HMRC issue a notice to file it must be completed.

However, you did not receive this notice as it was sent to the wrong address which should be a reasonable basis for making an appeal. The fact that HMRC is now corresponding to your new address should back that up. Stick to your guns on this and let us know how you get on.

https://www.gov.uk/tax-appeals/penalty

Moondreamer

Thanks, I appreciate you taking time to read my rambling post! Its just so confusing but I'm adamant I'm not at fault and I don't agree with being penalised for something I had no knowledge of. They just bamboozle you with  so much jargon so you think "f*** it, I can't be bothered and will just pay" but I don't have £500+ available for myself let alone the tax man! I'll keep you posted as much as I can and any further advice and comments are greatly appreciated, always helps to get different perspectives on things cos I'm no expert!

[Deleted User]

Ray_Coman said:

If your only source of income is PAYE and your total income is not more than £100,000 for any of the tax years above you would not need to file a Return.  please write to HMRC to let them know that you did not need to do a Tax Return. This frequently asked question about self-assessment registration could be helpful: https://comanandco.co.uk/faqs-on-self-assessment-registration

I am a bit ‘out of the loop ‘ now and the legislation moves faster than I do, but it does appear that you can successfully appeal even after penalties have been issued.

https://taxaid.org.uk/guides/taxpayers/tax-returns/im-not-sure-whether-i-need-to-complete-a-tax-return

P.S. - not sure you should be linking to your own company on the forum 

Dazed_and_C0nfused

Ray_Coman said:

If your only source of income is PAYE and your total income is not more than £100,000 for any of the tax years above you would not need to file a Return.  please write to HMRC to let them know that you did not need to do a Tax Return. This frequently asked question about self-assessment registration could be helpful: https://comanandco.co.uk/faqs-on-self-assessment-registration

That simply isn't true.

There are various reasons why HMRC may ask for a Self Assessment return to be completed, potential liability to the High Income Child Benefit Charge and owing tax which cannot be collected through the PAYE tax code and hasn't been voluntarily paid being two.

The op may be perfectly justified in appealing against the penalties but completion of the return will almost certainly still be required and they will then need to arrange payment of any liability owed for the tax year in question.

[Deleted User]

Dazed_and_C0nfused said:

Ray_Coman said:

If your only source of income is PAYE and your total income is not more than £100,000 for any of the tax years above you would not need to file a Return.  please write to HMRC to let them know that you did not need to do a Tax Return. This frequently asked question about self-assessment registration could be helpful: https://comanandco.co.uk/faqs-on-self-assessment-registration

That simply isn't true.

There are various reasons why HMRC may ask for a Self Assessment return to be completed, potential liability to the High Income Child Benefit Charge and owing tax which cannot be collected through the PAYE tax code and hasn't been voluntarily paid being two.

The op may be perfectly justified in appealing against the penalties but completion of the return will almost certainly still be required and they will then need to arrange payment of any liability owed for the tax year in question.

Yes. I omitted to say that there is a two year time limit in applying to have a return withdrawn. Personally, I haven’t come across a successful application in this regard.

Jeremy535897

It looks as if the problem has arisen because HMRC believe there was an underpayment for 2015/16, and as they got nowhere, decided to ask for self assessment returns. Their completion for 2016/17 to 2019/20 will not be onerous as it seems OP had no taxable income in 2016/17 to 2019/20.

A quick google search reveals this:
https://www.rossmartin.co.uk/penalties-a-compliance/penalties-appeals/3167-did-hmrc-use-the-right-address

HMRC are in a weak position as OP could not have known of any need to notify HMRC of a change of address, and they sent the correspondence to the wrong address. If there is an underpayment for 2015/16 that would appear to be either HMRC's fault for issuing the wrong code, or the employer's fault for not notifying something that required a new code (I suppose it could be a P11D and a changed or new benefit).

I cannot claim any expertise in this area though.

sheramber

You cannot blame HMRC  for using your maiden name and an old address of they were not notified that you had got married and changed address.
 https://www.gov.uk/tell-hmrc-change-address

Jeremy535897

sheramber said:

You cannot blame HMRC  for using your maiden name and an old address of they were not notified that you had got married and changed address.
 https://www.gov.uk/tell-hmrc-change-address

Most people who don't fill in tax returns and never contact HMRC or receive contact from HMRC would not think to advise them of a change of address.

sheramber

very true. I  dealt with records that  were  out of date by 5 addresses. But part of the security checks when receiving phone calls was to confirm their address.  Out of date information   could make things difficult.
However, HMRC can only go by what is held on record.

Jeremy535897

sheramber said:

very true. I  dealt with records that  were  out of date by 5 addresses. But part of the security checks when receiving phone calls was to confirm their address.  Out of date information   could make things difficult.
However, HMRC can only go by what is held on record.

I think this was a rather unusual case, involving the end of employment at the end of a tax year, a marriage and change of name, and an emigration. I can only hypothesise that something about the last employment year, 2015/16, went wrong, and things just slowly escalated. Normally, as of course you know, HMRC don't need to contact straightforward employees, and they would be overwhelmed if they did. Standard notices of coding might come from a computer, but that is all. I think it is a very good idea if people take control themselves, setting up their personal tax account, ensuring details are up to date, checking pension entitlement etc.