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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Due to mistakes in my Husbands PAYE, letters going astray

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Due to mistakes in my Husband's PAYE, letters going astray and not being answered by the tax man- we ended up getting our local MP involved at one point! we owe a fair amount of back tax. My husband is still working and is paying high level PAYE. He set up a direct debit for a regular amount each month which we have offered to increase to £100 per month. This really is all we can afford to pay extra each month. They are now asking to see a list of income and expenditure, can they demand more than what we can afford to pay.

How much tax does your husband owe? How many tax years are involved? Have you had an explanation as to why the underpayments accrued? Was your husband in receipt of any taxable benefits in any of the tax years for which he owes tax? Did he have a second PAYE source of income such as a second job or pension during any of the tax years concerned? What did your MP do for you?
Customer: replied 3 years ago.

It's about 12000.00 going back two tax years. My husbands has two incomes and it was due to this that the underpayments occurred. Our MP wrote to the tax man for us to try and get a reason why my husbands letter were not being replied - they were going to different departments.


Leave this with me while I draft my answer. It's will be quite long so please bear with me.
Customer: replied 3 years ago.

Thank you

Thanks for your patience.
The fact that your husband has two incomes is almost certainly the catalyst that led to his tax problems.

When you start a new job, you normally hand your new employer a P45 from your previous employer and the new employer operates the tax code shown on the P45. When an individual starts a second job at the same time as they continue with their first job there will be no P45. In that case, the new employer should ask the new employee to complete section 1 of a P46, complete section 2 themselves and send it to the tax office for tax code instructions. Your husband would have ticked box C to confirm he had another job.

The P46 should have been sufficient for the tax office to locate your husband's other job and to calculate a tax code taking account of the first job and issue it to his secondary employer. Whether a P46 was completed and submitted or not is something you should find out. The tax office is only as good as the information it is provided with and cannot be held responsible for an employer not following the correct PAYE procedures. If a P46 was completed and submitted, then you need to take that up with the tax office and ask for a list detailing tax codes issued on each job and their dates of issue.

Ultimately, the law states that the taxpayer is responsible for ensuring that their tax affairs are in order and the tax office have to accept that it was reasonable for the taxpayer to believe that they were in order for them to be absolved of any responsibility for an underpayment occurring. The tax office will almost certainly ask your husband if he really thought the tax deducted overall from his two incomes was correct.

Your husband should check any tax calculations of the underpayments for accuracy. If they are correct, he should write to the tax office and ask them to review his case and ask for an explanation as to why he is underpaid (remember to ask about the P46 and tax codes) and to write off the tax owing under Extra Statutory Concession A19 which they should do if they did not use information supplied to them that should have enabled them to get his taxes correct within the time limit set out in ESC A19.

If the tax office maintain they weren't responsible for the underpayments after reviewing his case, he should ask for a second review by another tax officer. After that, if he needs to, he can make a complaint to The Adjudicator's Office and then to The Parliamentary Ombudsman.

If your husband does still have to pay the tax after the second review, then he will need to negotiate with the tax office to pay it over a period of time. It would take more than ten years to repay £12,000 at £100 per month and interest would be accruing all the time. It isn't uncommon for the tax office to ask a taxpayer to complete an income and expenditure account so that they can assess his financial circumstances to see if, in their view, he could pay more each month. I cannot see the tax office allowing him to pay the debt off over as long a period as twelve years to be honest.

You should read the notes here and here which are directly related to your husband's situation.

The appeal process I have outlined above is the only way that matters of this type will be looked at if you don't want to accept the tax liability.

I hope this helps but let me know if you have any further questions.
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