Owe HMRC underpaid income tax, wrong date on previous employer's P45

Trek98

Hello,

Recently I received a P800 tax calculation claiming that I owe a substantial amount to HMRC in underpaid income tax. I am at a total loss to understand how this would have occured, given how I have only ever started jobs and left jobs and was on top of admin where needed, but I have looked into it and believe to have narrowed the cause down to a temporary job which I had started in November 2019, then quit a couple of weeks afterward to move on to a full-time job. I had immediately terminated the employment in November according to the contract I was under at the time, but in February 2020 I was then paid supposedly accrued holiday pay for the wages I received in that job, then was only issued the P45 in which it was dated for. So this would be wrong as the leaving date should've been that of when I had terminated in November. I contacted the payroll agency who handled this job and they say that I remained in their employment until February 2020, which isn't true because I was working at the new full-time job from December 2019 onwards.

How should I approach this? Should I go back to the previous employer and tell them that they're wrong, or should I simply tell HMRC this was the case in the hope of at least reducing the amount owed? I don't think this is right in the slightest as I wouldn't have done anything on my end to incur such. Any help on this would be highly appreciated, thanks

AskAsk

the tax is not calculated on dates but actual paid salary.  so if you believe that temporary job is the problem then did the P45 have the correct amount paid to you in that employment?  the tax will be based on the figure quoted in the P45 form.  the leaving date is not so important here but the actual amount declared.

what job is it and how much did the P45 state you were paid while you worked there?  the gross taxable amount.

TELLIT01

Has HMRC provided detail of your income for the period in question and does it match your own information?  As AskAsk says, the dates of employment are unimportant.

When I worked at DWP we would often get P45s with employment end dates which differed from that provided by the claimant.  Whether it should be or not, the date on P45 almost seems to be random.  Sometimes it would actually be the date employment ended, on other it could be either the date payroll was run or the paydate.  It didn't make our job any easier!

Trek98

AskAsk said:

the tax is not calculated on dates but actual paid salary.  so if you believe that temporary job is the problem then did the P45 have the correct amount paid to you in that employment?  the tax will be based on the figure quoted in the P45 form.  the leaving date is not so important here but the actual amount declared.

what job is it and how much did the P45 state you were paid while you worked there?  the gross taxable amount.

Thanks for your response. The gross amount paid was £400~. This is made up of the only two paychecks I received when I was there, followed by the February payment. On the second payslip in 2019 there was a rebate of £300~, which I have no idea why that was even applied, then the February payment incurred a further rebate of around £500~. This total rebate of £900 is what HMRC now says I owe.

That being said, had the P45 been issued at the time I had left, would I not have received that February payment and by extension the further £500 rebate? I still believe that is the root of the problem, but of course need to get to the bottom of this. Not to mention when I had filled out the starter checklist for moving onto the next job, I declared that it was now my only job, whereas the system thinks I had two jobs when that was not the case.

As for the job itself, it was a temporary job working through an agency on an assignment for a client, I believe taxed at the basic rate as normal. 

chrisbur

From the details given it appears that you may have had payments from old employer and new employer in the same tax month.  This results in you having been given tax allowances by both, so two allowances when only one is due.  Unfortunately this is something that happens sometimes when you change jobs. 
You can check if this has happened by looking at the month number on your P45 1A and the month number on your first new job payslip.  If they are the same or new job payslip is earlier than the P45 you have an overlap.

AskAsk

Trek98 said:

AskAsk said:

the tax is not calculated on dates but actual paid salary.  so if you believe that temporary job is the problem then did the P45 have the correct amount paid to you in that employment?  the tax will be based on the figure quoted in the P45 form.  the leaving date is not so important here but the actual amount declared.

what job is it and how much did the P45 state you were paid while you worked there?  the gross taxable amount.

Thanks for your response. The gross amount paid was £400~. This is made up of the only two paychecks I received when I was there, followed by the February payment. On the second payslip in 2019 there was a rebate of £300~, which I have no idea why that was even applied, then the February payment incurred a further rebate of around £500~. This total rebate of £900 is what HMRC now says I owe.

That being said, had the P45 been issued at the time I had left, would I not have received that February payment and by extension the further £500 rebate? I still believe that is the root of the problem, but of course need to get to the bottom of this. Not to mention when I had filled out the starter checklist for moving onto the next job, I declared that it was now my only job, whereas the system thinks I had two jobs when that was not the case.

As for the job itself, it was a temporary job working through an agency on an assignment for a client, I believe taxed at the basic rate as normal. 

without seeing all your figures it is difficult to work out if the P800 is correct.  you need to check that the gross taxable earnings on the P800 matches your total gross taxable earnings from your payslips for all employment for the period 06.04.2019 - 05.04.2020

As you did more than one job during that tax year, more than likely one of your employer has not taxed you at the correct tax code and so you owe HMRC the £900.  you should add up all your gross taxable earnings for the tax year and calculate the income tax yourself, then compare this with the acutal income tax deducted from all your employment and you will more likely find there is a difference of £900.

chrisbur

Have just seen your post of 11.31 this appears to be far more than an overlap of tax months.  In order for your second employer to have made a tax rebate of this magnitude they must have received previous pay and tax details. To understand what has happened more details are required.
As I understand it there were three employments ( and I assume no periods of unemployment benefit) 
First employment tax code and was there an X after it along with gross and tax figures.
From second employment which had three payslips from each payslip taxable gross, tax paid/refunded, tax code, taxable pay to date and tax paid to date.  Also if showing previous gross and tax figures.
From third employment last payslip for the tax year taxable gross, tax paid/refunded, tax code, taxable pay this employment, tax paid this employment,taxable pay to date and tax paid to date.  Also if showing previous gross and tax figures.

Trek98

chrisbur said:

Have just seen your post of 11.31 this appears to be far more than an overlap of tax months.  In order for your second employer to have made a tax rebate of this magnitude they must have received previous pay and tax details. To understand what has happened more details are required.
As I understand it there were three employments ( and I assume no periods of unemployment benefit) 
First employment tax code and was there an X after it along with gross and tax figures.
From second employment which had three payslips from each payslip taxable gross, tax paid/refunded, tax code, taxable pay to date and tax paid to date.  Also if showing previous gross and tax figures.
From third employment last payslip for the tax year taxable gross, tax paid/refunded, tax code, taxable pay this employment, tax paid this employment,taxable pay to date and tax paid to date.  Also if showing previous gross and tax figures.

Thank you, I'm working on getting this information now.

So from the responses in this thread I'm guessing it's safe to say one of my employers definitely made an error - would this be enough on its own to raise a query with HMRC? Would there also be anything worth contacting my employers about to help my case?

Dazed_and_C0nfused

What case?

You didn't pay sufficient tax that year (or maybe did but got some refunded for some reason when it shouldn't have been).

All HMRC are doing is asking you to pay the correct amount for that year, think of it as an interest free loan if it is going to be included in your tax code from 6 April 2021 to 5 April 2022.

How would you feel if you had overpaid tax and HMRC refused to pay it back to you just because it wasn't resolved during the tax year in question?  It works both ways, there is nothing unusual in owing tax under PAYE, it happens to plenty of people.

Trek98

Dazed_and_C0nfused said:

What case?

You didn't pay sufficient tax that year (or maybe did but got some refunded for some reason when it shouldn't have been)

And this is why I'm asking about it here. If the underpayment of tax arose from either one of my employers (which is increasingly likely to be the case) or HMRC themselves making an error, then I will at least have some form of relief. I would understand if it was due to an error on my end somewhere down the line, but that is why I want to be 110% certain before making any decisions.

How would you feel if you had overpaid tax and HMRC refused to pay it back to you just because it wasn't resolved during the tax year in question?

Well if you knew how it worked then you would know that you don't even get a choice if you overpay tax - they issue the refund to you regardless. Furthermore, you ought to gain a complete understanding of the matter before making any major decisions.

It works both ways, there is nothing unusual in owing tax under PAYE, it happens to plenty of people.

So in other words it's completely normal to pay an out-of-pocket expense every so often just for the privilege of being employed? I don't think many people would be comfortable with parting with a large amount of money before doing proper checks beforehand.

AskAsk

OP - from my experience, HMRC very rarely makes a mistake on their tax calculations so if they say you owe them £900, they will be more than likely correct. 

your employers have not deducted enough income tax from your pay and so at the end of the year, HMRC has readjusted the tax due and asked for the difference.