COT3 breach

Undervalued

Sanofian said:

So even though I was asked to serve 4 weeks notice, confirmed by HR.

By law I was required to serve 7?

Bizarre, why didn't they tell me 7?

Thanks for your advice.

No, by law they were obliged to pay you seven weeks notice they don't have to insist you serve it.

Generally any contractual / legal entitlement is taxable. Compensation for the loss of your job is tax free up to £30K.

What is less clear is if the COT3 agreement is for £12K (tax free) PLUS seven weeks notice pay (taxable) plus payment for any untaken holiday (also taxable) which would be the normal arrangement.

OR, was it agreed that they would pay you an "all in" total of £12K for all of the above in which case the tax position is complicated as part of it would be taxable.

You need to take some advice from an accountant and / or a solicitor. The good news is that if you have paid tax when you shouldn't it can be reclaimed from HMRC for up to six years.

Sanofian

When I left I was paid for the 4 weeks notice I served plus accrued holiday.

P45 stated that amount.

When the award was paid supposedly tax free they paid 3 weeks in lieu of notice, so although I received £12k they reported additional earnings to HMRC which sent my tax code haywire and obviously ate into my tax free allowance.

Undervalued

Well as I see it you should have got £12K tax free plus the additional three weeks notice you were entitled to taxed in the normal way (just as the other four weeks were). If the firm won't correct it then you need to apply to HMRC for a tax refund.

Sanofian

The problem there is that HMRC say they need an adjustment from the company, the company are saying they are correct in the way they reported it.

I guess I need to request the 3 weeks they've underpaid me, but would that also be declared as earnings?

Undervalued

Sanofian said:

The problem there is that HMRC say they need an adjustment from the company, the company are saying they are correct in the way they reported it.

I guess I need to request the 3 weeks they've underpaid me, but would that also be declared as earnings?

Anything that you are contractually entitled to is "earnings" and should be taxed as such. Only the compensation (up to 30K) is tax free.

As I said, depending on the amount in dispute I would suggest you see either a solicitor or an accountant. Both the company and HMRC are far more likely to take notice of them.

Jillanddy

I am confused here. You say your claim was constructive unfair dismissal,  not unfair dismissal? So you resigned? In which case I'm sorry but everyone is wrongly advising you. Your notice period remains whatever your contract says - the four weeks I assume - no matter how long you worked there.  Your notice never changes unless your contract says otherwise. If the employer dismissed you,  that is when the notice period changes to reflect length of service.  

That said,  I otherwise remain of the same opinion as previously stated.  The employer did pay you the required amount and did not deduct tax etc.  They did not guarantee you that it would not be liable for such payments though.  That is an entirely different argument. Unfortunately it appears that the wording is poor and doesn't clarify this in the way that most settlement agreements ought to.  As a result you are stuck in a limbo. I can't see what court can order your former employer to amend their returns to HMRC - there simply isn't a law to do that.  So it stands between the employer and HMRC to resolve,  and if one or both won't do so,  I can't honestly see what you can do about it. Tax isn't my thing,  so all I canthink of would be whether there is a formal complaints process at HMRC. Maybe someone on the taxes board might advise on that?