Employer Errors on P60- Employee at fault says tax tribunal.
Discussion
An interesting tax case has just been decided in favour of HMRC (Ringo Scheithauer v' HMRC).
Mr Scheithauer (yes - that's his real name) was a senior employee with Dunhills Pontefract plc and the P60 he was given by his employer seriously understated his salary (a shortfall of £139,000) .
Even though the figure on the P60 was grossly inaccurate, Mr Scheithauer duly reported the incorrect figure on his 2016/17 Self Assessment tax return.
HMRC issued him with a penalty for £648 for submitting a negligent and incorrect tax return. He appealed the penalty, stating that he thought the figures were wrong but his employer had assured him they were correct and that he HAD to submit the lower amounts as that was what the P60 said.
The appeal failed and Mr Scheithauer has to pay the penalty.
The moral of the story is that you cannot rely on assurances from your employer when they have made a massive cock-up. It is up to the taxpayer to ensure what they put on the tax return is correct. Not understanding how the system works or ignorance of the law is no excuse.
Mr Scheithauer (yes - that's his real name) was a senior employee with Dunhills Pontefract plc and the P60 he was given by his employer seriously understated his salary (a shortfall of £139,000) .
Even though the figure on the P60 was grossly inaccurate, Mr Scheithauer duly reported the incorrect figure on his 2016/17 Self Assessment tax return.
HMRC issued him with a penalty for £648 for submitting a negligent and incorrect tax return. He appealed the penalty, stating that he thought the figures were wrong but his employer had assured him they were correct and that he HAD to submit the lower amounts as that was what the P60 said.
The appeal failed and Mr Scheithauer has to pay the penalty.
The moral of the story is that you cannot rely on assurances from your employer when they have made a massive cock-up. It is up to the taxpayer to ensure what they put on the tax return is correct. Not understanding how the system works or ignorance of the law is no excuse.
Yes - advice given by HMRC over the phone has no legal standing. The only advice given by HMRC that can be used in your own defence is advice given in writing. And by "writing" they usually mean an old fashioned letter ( a printed off e-mail or phone text message would not suffice).
Increasingly, the chance of speaking to someone at HMRC who really knows tax is getting smaller and smaller - so telephone advice from that source is often just plain wrong.
HMRC will also not stand by "advice" shown on their website.
Increasingly, the chance of speaking to someone at HMRC who really knows tax is getting smaller and smaller - so telephone advice from that source is often just plain wrong.
HMRC will also not stand by "advice" shown on their website.
HMRC guidance states that every person must take "reasonable care" but “reasonable care” cannot be identified without consideration of the particular personʼs ability and circumstances and HMRC recognises the wide range of abilities and circumstances of those persons completing returns and claims.
I think calling him a "senior employee" is a bit misleading, Eric; he was the Finance Director, The Finance Director of a company with a turnover exceeding £150m. And whilst he earned £306k in the year in question he only declared £167k. And then claims innocence because his employer assured him the figures were correct! I wonder what his job description said about compliance?
I think he got off lightly.
I think calling him a "senior employee" is a bit misleading, Eric; he was the Finance Director, The Finance Director of a company with a turnover exceeding £150m. And whilst he earned £306k in the year in question he only declared £167k. And then claims innocence because his employer assured him the figures were correct! I wonder what his job description said about compliance?
I think he got off lightly.
Ha, the full story is even more amusing. Logically the Finance Director is responsible for payroll, so even if he was an innocent victim of his company's error and the company is at fault then when you trace if back to the employee responsible that means ... he's at fault. Makes me smile.
Beetnik said:
HMRC guidance states that every person must take "reasonable care" but “reasonable care” cannot be identified without consideration of the particular person?s ability and circumstances and HMRC recognises the wide range of abilities and circumstances of those persons completing returns and claims.
I think calling him a "senior employee" is a bit misleading, Eric; he was the Finance Director, The Finance Director of a company with a turnover exceeding £150m. And whilst he earned £306k in the year in question he only declared £167k. And then claims innocence because his employer assured him the figures were correct! I wonder what his job description said about compliance?
I think he got off lightly.
And he had the gall to appeal the penalty I think calling him a "senior employee" is a bit misleading, Eric; he was the Finance Director, The Finance Director of a company with a turnover exceeding £150m. And whilst he earned £306k in the year in question he only declared £167k. And then claims innocence because his employer assured him the figures were correct! I wonder what his job description said about compliance?
I think he got off lightly.
Eric Mc said:
Yes - advice given by HMRC over the phone has no legal standing. The only advice given by HMRC that can be used in your own defence is advice given in writing. And by "writing" they usually mean an old fashioned letter ( a printed off e-mail or phone text message would not suffice).
Increasingly, the chance of speaking to someone at HMRC who really knows tax is getting smaller and smaller - so telephone advice from that source is often just plain wrong.
HMRC will also not stand by "advice" shown on their website.
That is absurd. Not doubting you are correct, just that it's an absurd position designed to catch people out.Increasingly, the chance of speaking to someone at HMRC who really knows tax is getting smaller and smaller - so telephone advice from that source is often just plain wrong.
HMRC will also not stand by "advice" shown on their website.
If I ask advice on the HMRC helpline I've often been put onto other more technical folks. That implies they know what they are talking about. If it's all just unreliable guff they should remove all of the call center staff and replace with a chat bot.
This happened to me about 15 years ago.
Left my employment to move to a different country. Submitted my P60 and proceeded to get organising the new life.
Several months later a letter from HMRC saying my P60 was wrong and I owed them £3K.
Turns out two digits had been transposed on my P60. Contacted previous employer who just said 'Ooops sorry about that.'.
HMRC were pretty good about it and saw it as an honest mistake so didn't fine me - still cost me £3K though. It is without doubt 100% the responsibility of the employee to ensure the figures are correct.
Left my employment to move to a different country. Submitted my P60 and proceeded to get organising the new life.
Several months later a letter from HMRC saying my P60 was wrong and I owed them £3K.
Turns out two digits had been transposed on my P60. Contacted previous employer who just said 'Ooops sorry about that.'.
HMRC were pretty good about it and saw it as an honest mistake so didn't fine me - still cost me £3K though. It is without doubt 100% the responsibility of the employee to ensure the figures are correct.
silverous said:
It isn't difficult to check your income on your tax return so I agree it is the individuals responsibility
Not sure what you mean by that. The figures you put on your tax return are entered on it manually. If you are given duff information by (say) an employer or a bank, you may enter that incorrect information on the return.Where this guy fell down is that he KNEW the P60 information was wrong but still entered that incorrect information on the return. His attempt to "get out of jail" was to try to push the responsibility for the error onto his employers because, according to him, they instructed him to enter the incorrect P60 data, even though they ALSO knew it was wrong.
The Moose said:
Thread title is verging on clickbait!
In what way? It's a genuine case with some interesting aspects to it. Clickbaiting is not my style.I've had problems of a similar nature when completing Self Assessment tax returns for clients who are under PAYE. Nothing like the scale of this individual and usually linked to how Benefits in Kind have been declared on P11Ds by the employers. It's sometimes quite hard to know what the correct course of action should be especially when the background as to how the Employer calculated the value of the Benefit in Kind value is not obvious or clear.
Eric Mc said:
The Moose said:
Thread title is verging on clickbait!
In what way? It's a genuine case with some interesting aspects to it. Clickbaiting is not my style.I've had problems of a similar nature when completing Self Assessment tax returns for clients who are under PAYE. Nothing like the scale of this individual and usually linked to how Benefits in Kind have been declared on P11Ds by the employers. It's sometimes quite hard to know what the correct course of action should be especially when the background as to how the Employer calculated the value of the Benefit in Kind value is not obvious or clear.
Your title is "Employer Errors on P60- Employee at fault says tax tribunal." - The fact that the employee you're talking about is the guy who's ultimately responsible for ensuring the P60 is produced correctly would likely make a difference.
As you will know all too well, HMRC don't generally look kindly upon you taking the piss out of them...which is what he was doing!
Of all the people in the organization, if you thought there was an error, this is the guy best placed to do something about it! If this was a more lowly employee, would they have done the same thing? We don't know.
The article on which I based my original post did not mention his role in the organisation although his salary levels indicated he was not just an "ordinary" worker - so perhaps I was misled slightly as to his culpability.
It just shows how looking beyond the headlines often reveals a more nuanced picture.
It just shows how looking beyond the headlines often reveals a more nuanced picture.
CoolHands said:
Sounds very one-way: hmrc won’t vouch the info they give you is correct. But you must vouch the info you provide is correct, otherwise it’s curtains.
As far as I can work out, HMRC already knew the true picture. It was the entry that the taxpayer put on his tax return that created the penalty,. At no point did HMRC lose any tax. The guy was given a penalty for an incorrect tax return - not for underpaying his tax.I had a similar situation but with a P45. I left the company close to the end of a tax year but my final compensation payment was made in the following tax year. The P45 was issued with the final payment numbers instead of the YTD salary details when I actually left the company. At first glance the numbers looked correct so I duly filed the P45 away. No P60 was forthcoming as I wasn't an employee at the end of the tax year.
When I inputted the numbers from my P45 into my self assessment I was due a £45k refund - I was expecting to be paying about £10k! I figured out the mistake and wrote on the return that I was relying on my P45 and I thought it was wrong (and attached a copy to the return). HMRC refunded me anyway and then had the cheek to launch an investigation! When I pointed out that I had already forewarned them of the mistake and told them I had the money ready to pay back they kindly reduced the penalty to zero.
When I inputted the numbers from my P45 into my self assessment I was due a £45k refund - I was expecting to be paying about £10k! I figured out the mistake and wrote on the return that I was relying on my P45 and I thought it was wrong (and attached a copy to the return). HMRC refunded me anyway and then had the cheek to launch an investigation! When I pointed out that I had already forewarned them of the mistake and told them I had the money ready to pay back they kindly reduced the penalty to zero.
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