How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Sam Your Own Question

Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 12834
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
16196420
Type Your UK Tax Question Here...
Sam is online now
A new question is answered every 9 seconds

I have just received a large tax bill from HMRC for the year

Resolved Question:

I have just received a large tax bill from HMRC for the year 2009-2010. Their letter says that they contacted me in 2011, but I don't recall this. Their letter did not include the calculation documents that they claim they sent previously.
I am PAYE, but I have also completed Self-Assessments since 2010-2011 and it has never been flagged to me via this system. I have also had a couple of conversations with HMRC over the past couple of years as my tax code seems to change every quarter and I have challenged them on this as it makes it difficult for me to efficiently manage my tax affairs. Again, no mention of any outstanding tax has ever been made on these calls.
I have always paid any tax due from a self-assessment immediately so my record suggests I respond to tax communications hence why me not recalling seeing this letter makes me question whether it was ever sent. I note, however, that my father was dying over the period they claimed they contacted me so it is not outside the realms of possibility that it was missed. That said, they insisted we file a return for him after he died even though he hadn’t worked for the previous tax year so I actioned that (begrudgingly – not the best thing to have to do immediately after a death of a parent!). Again further evidence that I manage my tax affairs appropriately.
Is there any grounds for appeal? They have demanded payment by 23rd July, and I simply don’t have the money to pay it.
Submitted: 1 year ago.
Category: UK Tax
Expert:  Sam replied 1 year ago.

HI

 

Thanks for your question and I am so sorry to hear of the difficulties that you are experiencing.

 

Does the tax they state is owed, to do with your late fathers tax affairs or yours?

 

And on what basis do they advise tax is due? (Where has the unpaid tax arisen from)

 

Thanks

 

Sam

Customer: replied 1 year ago.



Hello Sam,


The letter relates to a P800 Tax Calculation HMRC says they sent to me for the year ended 5 April 2010. They say that I did not pay enough tax via the PAYE system.
I only started doing Self-Assessments in the January 2012 when HMRC contacted me to complete a back-dated one for the 2010-2011 period. I then did one for the 2011-2012 tax year in the usual timeline and am due to complete one for 2012-2013 now. This alleged outstanding tax bill has never been mentioned in any of these self-assessments.


Thanks

Expert:  Sam replied 1 year ago.

Hi

 

Thanks for your response

 

And can you advise how much it is for, and why not enough tax was paid (HMRC would have advised this, and although I appreciate you do not recall having received the P800 for 2009/2010 - it would be for the same reason they HMRC wished you to complete self assessment tax returns)

 

Do you have more than one source of income? If so please advise. Are you a higher rate taxpayer and have investment income, or do you receive company benefits such as car or fuel, or medical benefit?

 

Thanks


Sam

 

Customer: replied 1 year ago.

Hello Sam,


The tax owed is £6.5k.


 


I should have very simple tax affairs (hence why I've challenged HMRC on my ever changing tax codes). I only have one job and interest from savings would have been minimal. I have private medical insurance with work, but I include anything on my P11D in my tax return.


 


My tax code was wrong in 2009-2010. I can see this via my P60.I am an 40% tax payer and it was set at basic.


I always work with the best intent when it comes to my tax affairs and I have paid any tax due immediately, but this demand has come out of the blue and I can’t pay it by 23rd July.


I have always acted in good faith with respect to my self-assessments and it has never been flagged that I have tax owed from a previous year. In addition, I have had tax codes over the last few years with an “underpayment restriction” as they say I owe money from the previous year. It’s all very confusing.


 


I guess my question really is - what can I do about this? Can I appeal? Can I request an interest-free payment plan? Sending a demand for a period four years ago, and demanding payment in a month feels beyond what I consider reasonable!


 


Thanks,


Sarah

Expert:  Sam replied 1 year ago.

Hi Sarah

 

Thanks for your full response

 

To have grounds for appeal, one of two things have to have happened.

1) HMRC did not make timely use of information provided to them (and the employer having sent in a P60 and/or P11d) is not treated as information provided to them, there has to have been a contact highlighting a matter, that HMRC then fail to act upon OR

2) That there is an employer error, which I do feel there is scope to explore.

 

If you could advise

1) When you started with this specific employer, on which the wrong tax code was used for 2009/2010

2) Did you hand them a P45 when you started employment with them or have to fill in a form P46 - or were you even offered a P46

3) Has your tax code always been code BR with this employer, until such time this was rectified by HMRC

4) Did you ever question the code BR with either your employer. or HMRC prior to HMRC highlighting this fact

5) What date did HMRC issue the P800 (I would imagine they had stated this within their recent letter)

6) Was the code BR issue also the problem for 2010/2011 and 2011/2012

7) Once HMRC contacted you re completing self assessments and tax due did you then discuss this with your employer, as to how the wrong tax code was used.

 

I'm trying to establish if employer error can be argued for the tax stated to be owed, so any other information you can provide with respect to this employer, and your employment history with them, or any changes of tax codes from 2009/2010 to 2011/2012 would be useful.

 

Thanks


Sam

Customer: replied 1 year ago.

Thanks for your assistance, Sam.


 


HMRC say the P800 was send on 12 April 2011 and that they followed up on 5 May 2011. I really don’t recall either of these. Even though it was a very difficult period, I would have thought that I would have remembered a communication saying I had a material tax liability.


Given that HMRC has only followed up now, two years later, and they have failed to include a copy of the original document, could I appeal on the basis that two years is not a timely manner?


 


In response to your other questions:


1) When you started with this specific employer, on which the wrong tax code was used for 2009/2010 – I started in May 2009 so it went to BR in error.


2) Did you hand them a P45 when you started employment with them or have to fill in a form P46 - or were you even offered a P46 – I really can’t remember this, I’m afraid. I can check with my HR department.


3) Has your tax code always been code BR with this employer, until such time this was rectified by HMRC – I can see that my tax code changed from BR to 627L in January 2011. I don’t know if this is because my employer asked for it to be corrected or HMRC correcting it themselves. It changed to 712L in April 2011, 708L in Sep. 2011, and has changed another three times though to now (including a K code from May 2012).


4) Did you ever question the code BR with either your employer. or HMRC prior to HMRC highlighting this fact – no. Unfortunately, I appear to have missed that the BR code completely until now.


5) What date did HMRC issue the P800 (I would imagine they had stated this within their recent letter) – see above


6) Was the code BR issue also the problem for 2010/2011 and 2011/2012 – see above


7) Once HMRC contacted you re completing self assessments and tax due did you then discuss this with your employer, as to how the wrong tax code was used – the only correspondence I can recall is the one saying that I had to do a back-dated self-assessment for 2011-2012, and would have to continue doing them going forwards. I understood that I had met one of HMRC’s criteria for doing a self-assessment, and so never thought it was necessary to discuss with my employer as I just thought it was standard practice.

Expert:  Sam replied 1 year ago.

Hi

 

Thanks for your responses and apologies for my delay, I have been with clients the past few hours.

 

1) HMRC did raise the 2009/2010 P800 in a timely fashion as they sent in 12/04/2011 (although I appreciate that you did not receive it, so this is within the statutory time limits - as they had until 31/01/2012, under the self assessment rules, however if they find a mistake which applies back for earlier tax years, they have NO time limit at all, and can go back as far as they need to.

2) Please do check with your HR department as to what documents were completed from the start of your employment, and do not advise them why, as they may be reluctant to put themselves in a position where they might be held liable for this tax.

 

3) You state that the change to BR did not change until Jan 2011. so the wrong tax code being used (as in the BR code) was NOT the reason the unpaid tax arose for the period May 2009 when you commenced employment with this employer, to 05/04/2010, as this change of code would only have affected pay in the following tax year 2010/2011, so its important we establish what happened in 2009/2010 and so see item 2.

 

4) AS you did not notice the BR code, then unless the employer have made an error in 2009/2010 yet to be established, and we can argue employer error, then there will no scope to argue this further with HMRC

 

Thanks

 

Sam

Customer: replied 1 year ago.


Hello Sam,

 

To clarify, my tax code changed in January 2011 from BR to 627L, so it was BR from May 2009.


I don't understand how a letter that was claimed to have been sent to me in April 2011 is evidence of contacting me in a timely fashion. In any other sector, a follow-on confirmation would be sought (not two-years afterwards) or the documentation would be sent recorded delivery. How can I accept as fact that they sent it vs they made a screw-up and are simply pretending they did now? What type of operation would fail to mention such an important point when I phoned them directly on other matters or when I was submitting self-assessments? It comes across as a total joke. Unfortunately one that massively impacts people's lives.

What I need to understand is what can I do re: payment? It is not an option for me to pay for this by July 23rd or any time soon? How should I approach this?

I have always honoured my tax requirements, but this whole situation seems grossly dodgy.

Thanks,

Sarah

Expert:  Sam replied 1 year ago.

Hi

 

I do apologise, then you do need to find out why your tax code was BR. I feel (and I hope I am wrong) that you started this new employment and either the P45 was out of date or there was something on it that the employer could not use, and that a P46 was given to you to complete that was never returned, and they then followed HMRC instructions and used code BR ( I should advise these rules have now changed and code OT is used, which ensures that the right tax bands are used)

 

ONly HMRC can offer you advise why it was 2 years later from their originating correspondence, as to why they failed to chase up for this unpaid tax, and I suspect it was the PAYE unpaid position (which allows the issue of the P800) which cannot be carried onto the self assessment record, was overlooked, and its only now (due to the fact that the majority of the Southern tax offices, who are undertaking compliance and list work) this has been identified, but again this is no cause for appeal I am afraid to say.

 

As you wish advise without establishing facts first, all you can do, at this time is you get a letter of appeal in arguing employer error, as it was the employer that placed you on code BR at the start of your employment, but be mindful of the fact the position of the use of code BR might be due to your failure to complete appropriate forms for the payroll section of your employer.

And on the basis, start thinking about offering HMRC a payment plan to pay this tax off. If you are in anyway in a position to offer a half lump sum, then do so, as this will be looked upon more favourably by HMRC, in terms of accepting the other half paid by payment plan, but if you can make this payment term last no longer than 1 year, then HMRC are more likely to accept the offer.

 

 

But I can assure you there is nothing dodgy and if you see yourself you were on code BR for 2009/2010 you can easily see you have not paid enough tax, as all income would have been charged at 20% when some of it would have been due at 40% (although this would then be lesser than it would have been due to the fact you also were given personal allowances either)

I know its bad management on their part, and I agree there is no excuse for that, and I fully appreciate the impact this has on your life, but you could have drawn this matter to their attention, as you would have suspected that the BR issue did in fact relate to as far back as May 2009, and you have had the benefit of being paid too much with insufficient tax being deducted, and knew that had only pursued you for 2010/2011 onwards and it is (as far as HMRC are concerned) as much up to you in making sure your tax affairs are in order, ass its HMRCs.And unless you brought this to their attention, or had not been in the self assessment system then this first year of 2009/2010 would have been pursued long before now.

So its circumstantial there has been a delay, rather then sufficient in itself to argue grounds of appeal, and the only way to argue this, is employer error, if indeed its the employers fault, and you will need to ask HMRC to look into this, and /or approach the employer yourself to establish what took place with the tax position at the start of this employment.

 

Thanks

 

Sam

 

Customer: replied 1 year ago.

Thanks, Sam.
Yes, I am kicking myself that this is only something that I noted now. I meant dodgy in claiming letters have been sent when none have been received. I don't have any knowledge of any other letters going missing. It feels very suspect, and it looks like I have no route for challenging that. If I worked like that in the private sector then I'd be sued.

I am awaiting the documentation from my employer and I'll see what they produce. In the interim, I have spoken to HMRC and have asked them to resend the P800 calculation and the lady did say "yes, our system shows the amount of times you have contacted us since 2010, and I cannot tell you why this matter was never raised to you either on one of your phone calls or via the self-assessment system". At least she seemed as confused as me!

Expert:  Sam replied 1 year ago.

HI

 

Thanks for your response

 

In all my years I have never known HMRC to lie about issued correspondence but I have seen many letter both in and HMRC go astray!

 

I know the private sector has more to protect both the clients and the businesses, but HMRC are a government body collecting whats due to them, and its rare there is reason to appeal and have taxed owed written off.

I wish I could offer a basis of appeal for this reason, but I would be just giving you false hope if I did, and that would be just as unfair on you.

 

And the lady at HMRC is right, its was bad management that no one raised the PAYE underpayment with you from 2009/2010 - and that may be down to the lack of understanding that many of the contact centre staff have with the combined systems of PAYE and self assessment, but do get that letter of appeal in, and if you need further advise, once you have a response from HMRC, then do feel free to come back to Just Answer, and you can always ask for me Sam tax.

 

In the meantime if I could ask you to rate the level of service I have provided, it would be appreciated, as this ensures I am paid.

 

Thanks and good luck

 

Sam

Sam, Accountant
Category: UK Tax
Satisfied Customers: 12834
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
Sam and other UK Tax Specialists are ready to help you
Customer: replied 1 year ago.

Just an update: my work says there is no P45 or P46 on my file, and that the payroll department submitted details "on my behalf" on 23.03.2010 (which is 10 months after I started).


 

Expert:  Sam replied 1 year ago.

Hi

 

Thanks for the update.

 

But did the payroll/HR department issue you a P46 to fill in? That you then failed to return, or did they also fail to offer you the opportunity to complete a P46?

 

Thanks


Sam

Customer: replied 1 year ago.

Hello Sam,
I have to say that I cannot remember. I usually respond pretty quickly to financial papework, but it was four years ago and I cannot say with confidence that they failed to provide a P46.


Thanks,


Sarah

Expert:  Sam replied 1 year ago.

Hi Sarah

 

Then you need to establish this with the employer, whether a P46 was offered to you in the absence of a P45, as this will make all the difference as to whether employer error can apply, and tax deemed to be the employers cost to bear.

 

Thanks


Sam

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Andrew Baker(baktax)

    Personal Tax Adviser

    Satisfied Customers:

    756
    35+ years experience in income tax, CGT, non-residence
< Last | Next >
  • http://ww2.justanswer.com/uploads/baktax/2009-7-15_202414_Frame.jpg Andrew Baker(baktax)'s Avatar

    Andrew Baker(baktax)

    Personal Tax Adviser

    Satisfied Customers:

    756
    35+ years experience in income tax, CGT, non-residence
  • http://ww2.justanswer.com/uploads/teap007/2009-01-10_145815_bill_justanswer_for_profile.jpg TEAP007's Avatar

    TEAP007

    Tax Preparer

    Satisfied Customers:

    754
    Fully Trained Inspector of Taxes / District Inspector/ Team Leader/ Offshore Consultant/ 41 years
  • http://ww2.justanswer.com/uploads/BE/berduchwal/2011-6-7_84817_pict0854.64x64.jpg berduchwal's Avatar

    berduchwal

    Accountant

    Satisfied Customers:

    669
    Qualified accountant and bookkeeper running my own practice since 2008.
  • http://ww2.justanswer.com/uploads/JO/Josh2010/2012-4-29_19490_GettyImages80121770B.64x64.jpg Joshua's Avatar

    Joshua

    Lawyer

    Satisfied Customers:

    61
    LL.B (Hons), Higher Prof. Dip. Law & Practice
  • http://ww2.justanswer.com/uploads/RO/Ronaann/2012-3-19_23343_SSL22629.64x64.JPG Mrs-Tax's Avatar

    Mrs-Tax

    Tax Adviser

    Satisfied Customers:

    59
    Law Degree, 19 years in UK Tax.
  • http://ww2.justanswer.com/uploads/TG/TGraham12/2012-7-17_81212_bigstockBusinessHandshake508163.64x64.jpg Thomas's Avatar

    Thomas

    Solicitor

    Satisfied Customers:

    48
    Exposure to general tax issues
  • http://ww2.justanswer.com/uploads/struppiaml/2009-10-9_95150_anthony_business_002.jpg AnthonyL's Avatar

    AnthonyL

    Tax Adviser

    Satisfied Customers:

    19
    ATT, ATII, 12 years tax experience