Who is liable to pay underpaid tax?

chrisbur

Was there any other taxable income eg unemployment benefit other jobs.
If so was a P45 issued for these.
What is the HMRC calculation for the £1500 under-paid
You mention emergency tax for a few months when was the P45 given to your employer.

la531983

@Kashdown any further update on this? See above.

Kashdown

Sorry for the delay, I’m just trying to find the HMRC calculation letter. 

There wasn’t any other taxable income, apart from my previous employment. The P45 wasn’t given to my previous employer. 

Thanks again for helping! I really appreciate it. 

Kashdown

I’ve just got off the phone to HMRC as I couldn’t find my tax calculation. They explained because the P45 was never sent to my employer, I effectively had two lots of tax free allowance. Despite paying emergency tax, I still owed them £1.5k. It’s now already been sent to a debt collector. I have no idea how I’ll pay this with no income Thanks everyone for trying to help me!

chrisbur

Kashdown said:

I’ve just got off the phone to HMRC as I couldn’t find my tax calculation. They explained because the P45 was never sent to my employer, I effectively had two lots of tax free allowance. Despite paying emergency tax, I still owed them £1.5k. It’s now already been sent to a debt collector. I have no idea how I’ll pay this with no income Thanks everyone for trying to help me!

There is a small chance that the employer may be responsible for the tax see here....
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/366615/employer-errors-deduction-paye.pdf

Firstly the explanation given to you is a bit misleading.  Just not handing in a P45 does not result in you being under-taxed. 
If no P45 is handed in then the employer should ask you for details on a starter checklist, some details can be seen here did this happen?
https://www.gov.uk/guidance/starter-checklist-for-paye
If you scroll down a bit you can download a PDF to see what one looks like.

HMRC will then notify the employer of the tax code to be used and any previous pay and tax that would be on a P45.  This replaces the P45.
Whether the employer gets the previous pay and tax from the P45 or from HMRC the result is the same they have a tax code with taxable earnings from the old employer and any tax paid.

On the payslip you showed earlier for month 12 the tax code used was 1288L applied on a cumulative basis with no previous pay and tax details.
This tax code must have come from HMRC ( or I suppose the employer but that is something they should never do)
It is very unlikely HMRC would miss off the pay/tax details so strongly suggests it was the employer who failed to input these details.

The from the P45 were  code 1257L  month 3 tax 8714.37  tax 1113.80
On 1257L  for three months you would get a tax free allowance of 12579/4   (ie 3/12 ths ) which is £3144  Tax due on that is 20% so £628 so if these two jobs were the only taxable income then HMRC calculation seems adrift. 
It does look like you had a gap between jobs was that the case and if so did you get any taxable payment I am thinking perhaps unemployment benefit?

To get a better idea of what has happened can you show details of month 11 payslip
Anything else showing on payslips shown earlier eg tax code  previous pay previos tax especially if blank
What was the tax code you refer to as emergency tax 
"Once I had this discussion with accounts, they paid me the extra amount I should have been paid." What was said by the employer
Was there a starter checklist as mentioned earlier.
Details of HMRC calculation.  Could be on your personal tax account
https://www.gov.uk/personal-tax-account

Kashdown

Thank you @chrisbur !

I've found the Starter Checklist I completed. I ticked Statement C thinking I would receive the P45, as I was sent this form before I started my employment with them. 

I can confirm there was no gap between jobs. I went from one job straight into the other. 

I have found my previous payslips showing 'br' tax code, and also the Sept payslip from my employer before that. 

I can't seem to find the calculation, only a summary of which I've attached. 

Dazed_and_C0nfused

It seems fairly clear now what has happened.

Your new employer operated tax code BR as a result of the starter declaration you completed.

HMRC subsequently issued code 1288L (on a cumulative basis).

Your new employer operated that code in March 2022 and as a result made a significant refund to you in that months pay.

As the new code was on a cumulative basis the key factor here is whether HMRC included details of your earnings from your previous employer in the tax code notice they sent to your new employer.

If HMRC included the details then the fault lies with your new employer.

If HMRC didn't include them then HMRC have caused the problem, your new employer has simply actioned the new tax code.

But either way you have benefited from the nearly £2k tax refund that formed part of your March 2022 pay slip.  So you're not any worse off overall, just paying tax at a different time to when you should really have done.

Not ideal but you have effectively had an interest free loan from HMRC

Kashdown

That’s a lot clearer now, thank you. 

chrisbur

Dazed_and_C0nfused said:

But either way you have benefited from the nearly £2k tax refund that formed part of your March 2022 pay slip.  So you're not any worse off overall, just paying tax at a different time to when you should really have done.

Not ideal but you have effectively had an interest free loan from HMRC

There are two ways of looking at this....
An interest free loan is one way, accept that and pay up.
Another way is that an interest free loan is only be good if you know it is a loan and you will have to pay it back.
Not so good if you thought that it was a repayment of tax.  You knew that being on BR code meant that you were overpaying tax so expected some back.  You did not understand how PAYE works in that a tax code plus pay and tax details are needed so did not realise that just getting a tax code had not really sorted everything.  There was an error (HMRC or employer) but you did not know that until you got the tax bill.  Contacting HMRC to try and get this tax bill cancelled may well not succeed but then again it might who knows.


  

Dazed_and_C0nfused

chrisbur said:

Dazed_and_C0nfused said:

But either way you have benefited from the nearly £2k tax refund that formed part of your March 2022 pay slip.  So you're not any worse off overall, just paying tax at a different time to when you should really have done.

Not ideal but you have effectively had an interest free loan from HMRC

There are two ways of looking at this....
An interest free loan is one way, accept that and pay up.
Another way is that an interest free loan is only be good if you know it is a loan and you will have to pay it back.
Not so good if you thought that it was a repayment of tax.  You knew that being on BR code meant that you were overpaying tax so expected some back.  You did not understand how PAYE works in that a tax code plus pay and tax details are needed so did not realise that just getting a tax code had not really sorted everything.  There was an error (HMRC or employer) but you did not know that until you got the tax bill.  Contacting HMRC to try and get this tax bill cancelled may well not succeed but then again it might who knows.


  

I guess it's possible but looking at the concession for this I don't see that being viable

https://www.litrg.org.uk/tax-guides/employment/what-if-i-do-not-pay-enough-tax/extra-statutory-concession-a19#toc-what-is-the-reasonable-belief-test-for-esc-a19-