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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi Ive recently received a tax demand for a £6600 underpayment

Resolved Question:

Hi

I've recently received a tax demand for a £6600 underpayment in 2009-2010 and 2010-2011. I contested this under ESC A19 but this was rejected. Basically when I switched over jobs in 09 they admit they failed to use the p45 info from the first company and put me on to a BR tax code treating my new job as secondary employment for quite a long period (around 2 years). As a result I did not pay the higher rate tax amount owed. I received my payslips online in my new job and admittedly did not review them much as my pay was consistent and I was on PAYE so did not expect any issues. I also moved house a few times and so did not get any mail on this however they say that as it was my responsibility to notify them of a change of address this is my fault and that I was sent a letter detailing the underpayment in Jan 2012 (although I never received this and they have no copy of the letter that was sent). Is it worth me trying to contest this again? Is it possible to approach them and offer to pay some of the amount or does the taxman treat this more as you pay all or nothing?
Submitted: 1 year ago.
Category: UK Tax
Expert:  Tony Tax replied 1 year ago.
Hi.

Ultimately, the law states that you as the taxpayer are responsible for ensuring that your tax affairs are in order as the tax office have explained to you. That is a big get of jail card for HMRC and the tax office have to accept that it was reasonable for you to believe that they were in order for you to be absolved of any responsibility for an underpayment accruing.

The P45 should have been used by your former employer if you handed it to them which you say you did so you might try to find out what went wrong there.

You should ask to see the calculations of any underpayments. As you have already appeaedl once, you should ask for a second review by another tax officer. Ask them to ask your employer why the P45 tax code was not used. If the second appeal fails you can make a complaint to The Adjudicator's Office and then to The Parliamentary Ombudsman.

If you do have to pay the tax you can negotiate with the tax office to pay it over a period of time. HMRC won't give any discount. You should read the notes here, here and here which are directly related to your situation.

I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.

Hi


 


Thanks Tony. I'm not that keen to get my employer involved as I don't want to cause any problems in my job. Would a P45 being issued by my first employer have indicated to the tax man that the role was not secondary employment and add weight to my argument? Did they put me on this BR tax code or was this the fault of my employer?


I also overpaid tax in the following tax year 2011-2012 as they switched me to a higher rate second job tax code for a while but I then did not go back and check previous tax years and this was refunded immediately. Had I known about this underpayment at the time I would have offset the 2 payments. Could I use this to indicate I thought my tax affairs were in order ...i.e. I did not notice either the overpayment or underpayment of tax. I get the feeling that the likelihood of this being cancelled is very low - is that your impression?


 


Thanks for your help.


 


Tanya

Expert:  Tony Tax replied 1 year ago.
If you only had one job at any one time, the the P45 should have been used when you changed jobs.

I see your point about receiving a repayment for 2011/12 as the tax office put you on a D0 code and you might ask why they issued a repayment when there was an underpayment for an earlier year. You might ask the tax office why that wasn't picked up then and ask why you should not have felt that your tax affairs were in order if the tax office were issuing a repayment.

I don't hold out much hope for you I'm afraid but you should at least give it a try.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14221
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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