P800 Tax Calculation help

[di30]

Yesterday, a family friend received 2 letters of P800 Tax calculations.

One was that of stating that she was due a refund from a 2008-09 award of £449

and

Another one to say there was an underpayment in 2010-2011, so the above refund will be used to reduce the underpayment to bring the amount down to £248.

On the 2008-09 - it says she did not receive the full benefit of all her tax free personal allowance (which was why there was a refund due), and on the 2010-11 - it says she has 2 employments at the same time where both employers were applying the PAYE code giving the full tax free allwances, so therefore received more allowances than due.

(which is why they will be using the refund from the other as stated).

However, she did give them a ring yesterday to confirm she did not work 2 employers at the same time, but finished one to start another.
And she also confirmed that when she received the P45 from the previous company she worked for, she handed it to the new employer (as you do), so left it to them to deal with.

Last year well over 13 month now she says, she had a letter from the compliance section of the HMRC who wanted to check some details, because they were reviewing income etc, so she dealt with them instantly, and even has the letter to prove that.
It appeared that the employer did not add the prevous income to the new income.

Anyway, she told the guy in relation of his matter that the underpayment is no fault of her's, she done what she had to do by passing the relevant P45 details and she confirmed she is naive about tax issues, and that should have been dealt with by the employer (payroll).
The guy said, yes but "you" still have to pay it", she said, she understands but she does think its down to the employer to put this right.
She shown me a part of the leaflet that was enclosed with the letters that says, you can hold them (employer) responsible, and if agreed they should pay for it.

And another thing as well, the HMRC known of the details 13 months ago (as said above), so why wait until now??

Any thoughts on this please guys.

She said she still has the email from the employer who confirmed they did receive the P45, back when she started with them in 2010.

Cheers folks.

[SXGuy]

Re: P800 Tax Calculation help

Hey Di.

Tough one, employer is responsibe for submitting the P45 on time, that being said though, when the end of year submissions go in, they must clearly state on the P14/35 the date the employee left employment.

So even if the employer failed to submit the P45, the end of year submission will clearly show she left at that date (providing the employer has shown her as left, and hasnt just stuck her on hold)

The thing with HMRC is, they would prob want any tax due to be paid, before they eventually get round to sorting it and refund any overpayments, that of course is not your friends fault.

If it were me, i would tell your friend, to telephone HMRC's PAYE section, and ask to speak to an inspector, or someone higher than the telephone monkies, to explain the situation to them.

If she can give them the date she left her old employment, the amount of Gross pay up to that date and the ytd tax deducted (can be found on her last payslip from previous employer), HMRC can calculate any amounts due for refund, and can issue her new employer a new tax code if need be.

From what you have said, HMRC believe was given two tax allowances while being shown as working two jobs, her arugment is, she left one job to start another, which means her allowance would continue across, there was no 2 jobs, so there would not be any underpayment of tax, unless her new employer failed to add tax and gross pay already stopped.

If her new employer failed to carry across her previous PAYE, and gave her full allowances, then it would not take into account, gross pay to date, or tax paid to date, which could result in an overpayment or underpayment.

As i say, HMRC can issue a new tax code, so she can pay the difference off, i believe it has to be under a certain amount though but i cant see her owing more than the limit anyway.

[SXGuy]

Re: P800 Tax Calculation help

Oh also Di, I dunno if this will help her, its difficult to judge whether everyone envolved did their job properly, but if she can somehow find proof, that they did and HMRC failed to respond in time, then she may be interested to read this.

http://www.hmrc.gov.uk/esc/esc.htm

[di30]

Re: P800 Tax Calculation help

Ooh thank you, I shall pass on the word, it makes sense what you said.
She is in a tizwaz about this, I told her try not to worry.

Fab info, thank you x

[di30]

Re: P800 Tax Calculation help

Right, i have quickly passed on the message, her puter is off for few days coz she changing over to another provider, so she may pop in later or tomorrow, so i can show her what she can try to do about it.
And she says thank you too. x

[di30]

Re: P800 Tax Calculation help

Oh i forgot to say, she said the guy said it was payable as from next April at about £20 a month until paid, something like that, so I assume they would be adjusting her tax code as from then perhaps?

[SXGuy]

Re: P800 Tax Calculation help

Sounds about right Di.

They will issue her employer with a new tax code to deduct £20 a month more from her wages. Best result you can hope for really if she cant argue the point about them being late noticing the error.

Make sure she checks her new tax code on her first payslip after April, as HMRC can sometimes be late sending coding notices, and she may get a big chunk deducted 2 or 3 months down the line, and we wouldnt want that.

[di30]

Re: P800 Tax Calculation help

Thanks again.

I've spoken to her on the phone again for a few mins, and she is not sure whether to go the error of the employer or of the other one "HMRC".

Because she says, the employer confirmed by email they received the p45 which she has a copy of, and in regards of the HMRC, when her income was reviewed last year (Oct) by the compliance section of the HMRC, then why wasn't is acted on then and only now they have decided to do this.

Just a thought though, is the compliance section the same as the HM customs side of it, shouldn't they have forwarded the information on about the income, because this may have been about tax credits not sure, but surely they would have held the info on data base??

Confusing

[di30]

Re: P800 Tax Calculation help

Leaflet she left with me yesterday about what she can do (HM customs).

[SXGuy]

Re: P800 Tax Calculation help

Compliance department is a seperate building i think, they are all linked via their systems but as with most organisations, left hand doesnt always know what the right is doing, and if they wernt looking for it, they may not spot it.

Seems to me theres two issues here, and depending on the answer really depends on what she can do next.

Its good to bare in mind, that as with law, what HMRC consider reasonable is down to interpretation, so any argument needs to be clear and state facts only, no room for wriggling out.

Her employer simply confirming they received the P45 isnt good enough in my opinion, she needs to ask them to confirm it was submitted to HMRC and the date of the submission. Should be easy enough to do, all submissions get an email to confirm receipt.

Her old employer should also confirm the date they submitted their part of the P45.

Once she gets a date from her new employer, she needs to check her payslip to see if the previous employers ytd paye details have been added or not.

Some employers dont always submit them asap, so it may not be on the first payslip, so ask her to check the payslip dated directly after the date they confirm submission.

If the ytd figures are there, she owes nothing, so she would need to show the proof to HMRC.

The fact they believe she worked two jobs at once says to me that the previous employer failed to submit his part of the P45, but if the new employer did everything correctly, she would still owe nothing.

If her new employer failed to add the paye ytd figures to her payslip, then it is a mistake on his part, and she would need to argue this with hrmc.

Theres so many variables to which road to take as it stands, so im just speculating what she should do at this point.

But the main thing is, to get these confirmation dates and check her payslip, then she will be better placed to take it further.

Ill be honest, ive never known the employer to pick up the tab for an error in tax before, its usually fixed by issuing a new tax code, but if she can show she did all the right things and is being penalised for it, then im guessing they will ask the employer to cough up.

[di30]

Re: P800 Tax Calculation help

Excellent (J) will be coming over tomorrow, I shall show her all your posts for her to read, and I also think it would be a good idea for her to get in touch to ask about submission dates of the P45 to the HMRC.

As far as I am aware, from what I can recall, she did say something yesterday about - she recalls questionning if the income previously earned from the earlier employer will be added on to the current weekly payslips, and was informed that they do this differently, so being naive she thought nothing of it any further and trusted them to deal with these matters.
But isnt the procedures for the new and old employer to forward these details to HMRC once they received them (p45 details)?

The letter she received from HM customs (Oct 2011) and they confirmed that they had received information from the employer about the income blah blah, so that section of HMRC did receive the full income details. (These details are the same shown on the P800 letter).

Anyway, thank you again for all this info, your a star, I didnt know what to suggest to her myself as up to now (fingers crossed) I've not been in that position.

Will get her to read this tomorrow, cheers.

[SXGuy]

Re: P800 Tax Calculation help

she recalls questionning if the income previously earned from the earlier employer will be added on to the current weekly payslips, and was informed that they do this differently, so being naive she thought nothing of it any further and trusted them to deal with these matters.

I dont know what they mean by doing it differently, the only difference with P45 submissions i know of, is something called RTI (Real Time Information) which is being piloted at the mo, comes into force next April, but all that is, is submitting details along with pay details each pay period, the P45 details would still need to be added to her payslip.

The only time P45's arnt needed to be submitted are if she earned below the Lower earnings limit. But again a record of her income would still need to be carried over.

Otherwise mistakes happen, as an example, say you worked 1 job from Period 1 to period 5, then left and started a new job at Period 6.

First job would have 5 Periods of tax allowances reducing the tax paid, then the second job, if missed previous paye details, would think she hadnt worked for 5 periods of pay and give her all those allowances again. By adding her previous pay details, it would calculate tax due by adding what shes already earned, deducting the tax allowance at that period, then deducteding tax already paid, to leave whats due.

But isnt the procedures for the new and old employer to forward these details to HMRC once they received them (p45 details)?

Yeah that is how its usually done, but, some employers do some crazy things, ive known some employers to mark the P45 as the date they left 2 or 3 months after actually leaving because they forget to do it at the time, or they forget to submit the info on time, all sorts of things.

[di30]

Re: P800 Tax Calculation help

Hiya

Thanks again for the input (J) not got here yet but she did ring me.
The employer contacted her after she emailed them, and confirmed that the HMRC received the P45 details (also confirmed) by them in Sept 2010.
J was paid monthly for the previous job and was being taxed at BR code with new employer whilst waiting for the P45 to come through, as it had taken that month.
The new employer told her on the phone today that as soon as they received he information, they forwarded on the relevant section to the HMRC, as its done electronically, the HMRC did receive it, which was why they sent a letter to question about the income in October last year.


The new employer confirms that the previous income was not added to the new income, as their's is done at the end of the tax year, where they did not include the income of the previous employment.

[SXGuy]

Re: P800 Tax Calculation help

Di thats bollox.

As soon as they submit her P45 she should have been taken off BR and put on her correct Tax Code.

BR is basically all taxable, so a straight 20% would be deducted from her Gross pay every week.

Did they change her Tax Code when they submitted the P45 or did they keep her on BR?

If they kept her on BR then shes overpaid tax! So why HMRC say shes underpaid puzzles me.

It sounds like a right fuck up if you ask me.

EDIT: and another thing, if for whatever reason she didnt have a P45, then a P46 should be issued which would clearly show its her only job, and she would then also be put on the correct tax code.

You dont leave P45 details off until the next year because they only apply to the current year, April to April, P45 would mean nothing a year later.

[di30]

Re: P800 Tax Calculation help

Di thats bollox.

As soon as they submit her P45 she should have been taken off BR and put on her correct Tax Code.

BR is basically all taxable, so a straight 20% would be deducted from her Gross pay every week.

Did they change her Tax Code when they submitted the P45 or did they keep her on BR?

If they kept her on BR then shes overpaid tax! So why HMRC say shes underpaid puzzles me.

It sounds like a right fuck up if you ask me.

Hiya

Yes they changed the tax code as soon as they received the P45 from the previous employer.

HMRC electronically received the details in Sept 2010. (sent by the employer).