Income Tax BIG problem!

quick-smart

Hi, I hope I've picked the right forum for this post. I'm trying to get help anywhere I can about this as it's a huge problem for my partner, and him being a bloke, I'm spending a lot of time trying to pull his head out of the sand!

He been in his job for 3 years, he is on PAYE and he doesn't get a fuel card, he has to claim for fuel used for business purposes per mile.
Before Christmas, he received a few letters, (all very contradictory) saying he owed £3600 in unpaid tax for 'benefit in kind' i.e. the car.

Originally they wanted payment by 30 days from the notice but after he spoke to them they said he'd have to make repayment arrangements with their own Debt Collection department and that he would be contacted by them in due course. He was told that due to the size of the debt, he wouldn't be able to have his tax code adjusted as it was too high an amount.

He checked with his payroll department who have confirmed that they have sent a P11D to the inland revenue every year he's worked for the company, detailing the benefits in kind he's received. He's also got copies of these, and it all ties up, and the company has put him on the tax code that HMRC have sent them and the P11D is correct.

He has also spoken to HMRC a couple of years prior to this debt and went through all the information they had about him when he first started with the company including car details.

He duly waited to be contacted by the debt department, but then received a letter to say that he was in fact going to have the amount taken from his salary every month for a year, resulting in an increase of £300 in tax every month!

He then contacted them with the details of the information he'd recieved saying he wouldn't have to pay in a year, and the debt collection bit. He's disputing the amount as he's on PAYE so if it's been done wrong, as far as I've been able to ascertain it's HMRC's fault and most people get the option to pay in installments appropriate to their income, and they in fact still owe him the tax back on fuel spent for work purposes which should knock about £1000 off the bill to start with.

The other odd thing is that until a few months ago, he'd been on the company health insurance scheme, which also gets put on the same P11D (on the reverse side) yet he's been taxed for that. Surely this proves that HMRC have not only received but processed his P11D, although only part of it. He's applied to HMRC to use their process ESC A19 http://www.hmrc.gov.uk/manuals/epmanual/EP6600.htm
It's now over the 28 days they have to reply, so when he opened his payslip today and found he's been taxed an extra £490 ON TOP of his normal tax/NI, he nearly had heart failure! He called the tax office who've said they're dealing with his request and his claim for tax back on his petrol but they've got a backlog of letters to deal with, and to call back next week.

He's now having to not pay some of his debts this month as he just won't have enough money for the petrol he needs as part of his job, so he's in a real pickle, and although I know it's long winded, I wondered if there was anyone who had any suggestions for this?

If you've got this far in the post, thank you very much for reading

Does anyone have any ideas/advice about this problem?

Thank you again x

fengirl_2

Without seeing all the correspondence, P11d#s, etc etc. it's hard to be of real help.
However, your OH's employer is required to give him a copy of his P11d each year. Have they done this and if not, why not? Without this info it is hard for him to check that his tax is correct. He needs to get copies of all the P11d's for the years in question. Then he needs to get out all his old notices of coding. If he doesn't have these, he needs to ask HMRC for copies.
Then he needs to compare the P11d details with his notices of coding and the assessments he has received to find out where the discrepancies are.
Official Error as you have seen only applies where someone has reason to think all their tax affairs were in order before receiving a surprise tax bill. If he has had notices of coding not showing car benefit when he knew he had a company car, it might be hard to argue his way out.
It might be easiest if, once he has collected the info, he makes an appointment to go and see someone at his local tax office to go through it and have it explained. If his tax affiars are not dealt with locally, he can ask his tax office to send his file to the local office for this interview.
He should also write to his tax office stating that the collection of the underpayment through his code is causing hardship. Send a list of monthly income and outgoings to prove this, and ask them to reduce the underpayment in his code for this year.
Wish I could help further.

quick-smart

Thanks for your reply, as you can see, it's very complicated when dealing with the income tax people!

He does have copies of his P11D for the last three years and has checked with his company for his codings, as far as anyone knew or could tell he was paying the right tax. Combined with the fact he has spoken to them to tell him about all his benefits in kind, he can't see what else he could have done, being on PAYE.

We're hoping for some more information next week when he calls them back, but I'll get him to do an income/expenditure sheet and send it off anyway, so that they have it when they come to look at him paying it back.

The problem now is that we're having to juggle his repayments to his other debts, and for this month, he's had to just not pay one of his loans as he just can't afford it with such a large chunk being taken out of his salary before he's even taxed. We worked out that with his normal tax/NI, they're taking about 45% before he even sees any money!

Fingers crossed we can get this sorted by next month so he can get back on track with his other loans.

Very nail biting situation!

System

quick-smart wrote: »

He does have copies of his P11D for the last three years and has checked with his company for his codings, as far as anyone knew or could tell he was paying the right tax. Combined with the fact he has spoken to them to tell him about all his benefits in kind, he can't see what else he could have done, being on PAYE.

Just one question - did he not get coding notices from HMRC?
If he didn't then that might suggest that a) HMRC didn't have a correct address for your partner and so he couldn't see that his code was incorrect or b)HMRC never received any notification, such as a P45 or P46, that indicated that he was a new employee of that company.

In the second case although P11ds may have come in from the employer after the end of the tax year with no record for your partner at that employer the P11d would have become a piece of work which joined many other taxpayers pieces of work on a worklist and in your partners case they reached his name on the worklist last christmas when by the sounds of it they assessed several years in one go.

I agree with fengirl that an appointment with his local HMRC enquiry centre would be in order to try to at least get some idea of the timeline of events and see if it is Official error. Whilst he is there he can put in an appeal to get the underpayment collected over a longer period.

quick-smart

He did recieve his coding, and they adjusted it for his car payment (or so he was told by the person he spoke to) not long after he joined the company. He also updated his address and all other details at the time.


The odd thing about it is that he also received health benefit, which was included on his P11D (but on the reverse side) and according to HMRC, he has been taxed appropriately for that, which indicates they've got all his correct details and have received and processed the P11D's for the last three years without any problem. He also handed his P45 in at the start of his employment.
He's going to speak to them next week again,to chase his letter asking them to re-examine both the repayment details and the fact that they owe him tax, and he's going to try and get into his local tax office. He's also going to do an Income/Expenditure form to send to them. Is there one on the site that he could use?

Wonder if you know the answer to something else, he was advised by the local tax office when he first received the bill back in October last year that he would be contacted by the Debt Collections Officer at HMRC to arrange repayment, but this never happened. Should he have received some kind of schedule of payment indicating what he would be paying each month and how long it would go on for? We don't even know at this point if he's had interest added to the original bill. He was originally told that as it's £3600, it would be £300 over 12 months, but this month is was £490, which means he'd end up paying back nearly £6000 over 12 months!! I worked it out that if he was paying off £490 per month, it would take him just over 7 months to repay the amount, and even to me, that seems like an excessive amount over such a short period of time.

As he was informed that he should wait to be contacted, we'd discussed it and agreed that once the tax rebate had been deducted from the bill, we would pay off a lump sum of the remainder owed to ensure the monthly payments were manageable. What's really irritating is that had they contacted him prior to this, we could have offered this to them which I'm guessing from their point of view would have been showing that he had every intention of paying it off and would also have reduced any interest they might or might not be adding to the bill.

Thanks for all your help, it's a really daunting thing as it seems very difficult to find out any concrete information about what the process for something like this should be.

fengirl_2

As I said in my post, you need to write to HMRC setting out his monthly income and expenses to show that he can't afford the repayments at the rate currently deducted.