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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14099
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hello, I am curently in dispute with HMRC regarding underpayments

Resolved Question:

Hello, I am curently in dispute with HMRC regarding underpayments in income tax over the last 5 years. I have entered into the complaints procedure and have just received a reply that my tier 2 complaint has not been upheld.

HMRC have conceeded that mistakes have systematicaly been made on their side, they have offered a £50 compensation payment, but hey will not "write off" the owing SA monies.

For info half of the monies I owed were covered by SA, and half by PAYE.The PAYE part has now been paid back via my tax code, The total I have owed at any one ime has been 10k.

I need advice on how best to move forward?
Submitted: 4 years ago.
Category: UK Tax
Expert:  Tony Tax replied 4 years ago.
Can you give me more information as to the amounts of the underpayments, what tax years are involved, an explanation of the split between PAYE and SA, whether your tax returns were completed and submitted on time, why the underpayments arose, why you think the Revenue were at fault and why you think the tax owed should be written off. Would you also let me know the source of your income throughout the period and whether you were employed or self-employed or both.
Customer: replied 4 years ago.

OK where do I start.

 

I returned to the UK in September 2005 after 5 years living overseas, during my time overseas I submitted SA tax returns each year demonstrating that no UK tax liability was owed.

On return to the UK I started full time employment with Sealed Air Ltd, they applied an emergency tax code for the remainder of 2005-2006. I have a number of benifits with my job and my company issued a P11D on my behalf, I completed my 05-06 tax return on line and I received a small rebate at the end of the tax year.

 

Unfortunatly HMRC did not use the information supplied when setting my tax code for 2006-2007, when I made my SA tax return in 2007 I found out that there was an under accrual of £3500. I informed HMRC and was shocked to find that a mistake had been made.

 

At this point I entered into the dispute procedure as I felt that the situation was unfair, unfortunatly to compound the issue HMRC again set the wrong tax code for 07-08. Because I had a promotion in April of 2007 I wrongly assumed that the exta money in my pay pack was to my salary increase, and not because of under accrual.

 

By January of 2008 I again realised that another underpayment had been made. At the same time I was informed that I could move from SA to PAYE.

 

 

The underpayment for 2007-2008 was £3132.

 

In the tax year 2008-2009 my tax code was changed to help pay back £2472 of the outstanding monies from 2007-2007,dispite the fact that the money was owed under SA. the balance of £660 will be collected in 2010-2011.

 

During the last 3 years I have attempted to demonstrate to HMRC that the under payment of tax was as a result of errors on their part. They conceed that my employer and myself have provided all info on time and in full, but they are still demanding that I pay.

 

My view is that I have paid the lions share of the money owed, they are charging me interest because of their mistakes, I would like them to clear the remainder of the owed money.

 

By the way I did ask what would be the minimum they would accept as payment, they told me that I shouldake an offer, my offer was that they would write off the remainder of the wed money.

 

I can scan and send you all of the corrispondance if it helps.

 

I plan to go to the Adjudicator next as I think I have a case, what do you think??

Customer: replied 4 years ago.
Do you require more info??
Expert:  Tony Tax replied 4 years ago.
Can you tell me what benefits you had in addition to your salary for 2005/06 please. When you started the job on your return to the UK were you the benefits provided straight away. If you were given a company car did your employer complete a P46 (Car) to inform the tax office that you had the use of a company car?

Were the employment benefits available in 2006/07 and 2007/08? Were P11Ds submitted for 2006/07 and 2007/08? Once you realised there was a problem with 2006/07 did you ask the tax office to amend your tax code to reflect those benefits?

Have you exhaused the complaints procedure as far as the Revenue are concerned?

Edited by Tony on 2/5/2010 at 10:14 PM EST
Customer: replied 4 years ago.

All benefits were available when I started employemnt, Car, Fuel Card (including private miles) and BUPA.

 

I assume that my employer completed a P46 although I am not 100% sure.

 

The same benefits were available in 2006/07 & 2007/08, P11D's were submitted by my employer.

 

Once I realised that there was a problem I contacted my tax office to find out what was wrong. It was they that realised that I was on the wrong tax code. I did not officially ask for a new code to be generated, I guessed that this would be automatic once the mistake had been registered.

 

FYI - in the letter I received today from HMRC they have stated that at the begining of 2008-09 my PAYE code was adjusted to include my taxable benefits "but inexplicably removed them on 26th Aug 2008. fortunatly my employer recognised the mistake and did not use the code of 603L".

 

What a fiasco, regardless of how often I communicate with them, they continue to make mistakes. I agree that the onus is on the tax payer to make sure all is in order, but come on how many times must I check their work??

Expert:  Tony Tax replied 4 years ago.
I have a similar case with the Adjudicator at the moment. I passed it to them in December 2008 having exhausted the Revenue's complaints procedures but it has yet to be resolved. If you go to the Adjudicator and I would advise you to do so, they won't even begin to look at it for a year as they have so many complaints against the Revenue to deal with. To be fair to the Revenue staffers, their numbers have been slashed in recent years and there is more to come. They aren't the problem. It's the self-serving idiots at the top of the Revenue who think the tax system in the UK can be run with half a dozen people and a tea lady!!

Your case has a better chance of success with the Adjudicator than the one I'm dealing with. The Revenue have openly admitted mistakes and did not act despite several opportunities to get your tax code in order.

What you need to do as best you can is write a detailed chronology of events, get any written correspondence and notes of phone conversations together and send it to the Adjudicator. Keep copies of everything. When they get round to reviewing your case, they will ask the Revenue for their version of events. You may not get all the tax written off but I believe you have a good chance of doing better than the pathetic offer of £50.
Customer: replied 4 years ago.

what about the interest that is being accrued, I can not stop this. It has been suggested that I pay the outstanding ammount, and claim it back at a later date? I think once I pay I will never see it again.

 

Another point, is it legal to collect tax via PAYE to cover SA liability. The £3k that has been collected without my consent could be gaining interest in my bank as we speak??

Expert:  Tony Tax replied 4 years ago.
If you pay the tax to stop the accrual of interest it will not affect the decision of the Adjudicator. You can make it clear in your letter to the Adjudicator that you have paid the tax without prejudice as you are aware that the case may take some time to reach a conclusion. If the case ends in your favour you will get back whatever the Adjudicator decides.

Self-assessment and PAYE are part of the same tax system. I have many clients who are employees and pay tax through PAYE, complete a self-assessment tax return each year and then have any tax underpayment collected through their tax code. There's nothing unusual about that.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14099
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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