Tax demand surprise.
Discussion
Mrs D had a demand from HMRC for £6.5 k today which to put it mildly was a bit of a surprise.
She was employed by me and retired when I did year 2019 - 2020. On phoning them we discovered that there were tax repayments due to her showing on 7 of the 12 monthly submissions of that year. All previous years were fine. This is where the demand comes from as obviously they want those back as they assume I as the employer has been giving her those repayments ( which I hadn’t as obviously I knew nothing of them) The amount of tax due always said £0.00.
Now this is where it gets weird. She is payed under the tax threshold the same amount per month so no tax is ever due. The repayments shown are random amounts ranging from £11 to £4k per month with no discernible pattern in them. From what I recall the computer crashed at one point and all data was lost so we had to resubmit the submissions but even so the numbers don’t match up.
I’m going to have to go on tomorrow and resubmit for that year which hopefully should update her account and sort it but it’s such an odd occurrence that we can’t tie the figures back to anything.
This is probably a rant more than anything but has anybody got a clue?
trickywoo said:
What do your (the company) payroll records show for that period?
They show paid the normal amount.This is where it’s partly our fault. When she prints the submissions out (which luckily we did as that particular computer has gone) the amount of tax due always shows as £0.00 which is to be expected.
However on going past the first page that is where the tax credits appear (e.g -£11.26). I’ll hold my hand up and say we should have noticed those but in my defence she’s been in my employ 15 years without a hitch in the tax. I guess we became complacent. We’ve never dealt with tax credits so I don’t think we’d even recognise them as such anyway.
If we’d noticed it earlier obviously we could have found the problem.
That’s my excuse and I’m sticking to it.
Drawweight said:
They show paid the normal amount.
This is where it’s partly our fault. When she prints the submissions out (which luckily we did as that particular computer has gone) the amount of tax due always shows as £0.00 which is to be expected.
However on going past the first page that is where the tax credits appear (e.g -£11.26). I’ll hold my hand up and say we should have noticed those but in my defence she’s been in my employ 15 years without a hitch in the tax. I guess we became complacent. We’ve never dealt with tax credits so I don’t think we’d even recognise them as such anyway.
If we’d noticed it earlier obviously we could have found the problem.
That’s my excuse and I’m sticking to it.
HMRC will totally accept that stance, you're fine.This is where it’s partly our fault. When she prints the submissions out (which luckily we did as that particular computer has gone) the amount of tax due always shows as £0.00 which is to be expected.
However on going past the first page that is where the tax credits appear (e.g -£11.26). I’ll hold my hand up and say we should have noticed those but in my defence she’s been in my employ 15 years without a hitch in the tax. I guess we became complacent. We’ve never dealt with tax credits so I don’t think we’d even recognise them as such anyway.
If we’d noticed it earlier obviously we could have found the problem.
That’s my excuse and I’m sticking to it.
Eric Mc said:
Did the company ever get any PAYE refunded?
No.The only evidence of any refunds is in the monthly submissions where there is a - amount under tax due.
7 out of the 12 submissions show random amounts that tie up to nothing we can deduce.
As I said above I’ll hold my hand up and say we should have noticed them before.
Unfortunately we’re being passed round to various departments and haven’t found one yet who can do anything.
Well I found the problem and yes there’s a mistake but we should have picked it up before it got to this stage.
Year 2018-2019 earnings were £8125 (not real figures) on the P60 no tax paid as you’d expect.
Year 2019-2020 had ‘Previous employment £8125, tax paid £8125.
Current employer. £8555. tax paid -£6500
Total earnings. £16680 tax £1234 (again not exact figures)
The problem appears to be that HMRC have put 2018-19 earnings in as earnings for 2019-2020 and have put refunds through to balance the tax.
Now I just need to find someone on the end of the phone with the knowledge/authority to sort this out.
Once again I hold my hand up and say this was glaringly obviously an error and we should have picked it up. Possibly demob fever as the business was closing.
Well that’s another 4 people spoken to.
Technical help, Employers helpline, PAYE then technical help again.
Nobody has heard of this happening before and because they can’t see the physical P60 it’s difficult to explain to them. If they could see that it’s blindingly obvious.
.
I’ve done an EYU in the hope it would reset but it won’t go through
possibly because the figures I’m submitting are exactly the same as previous. And it would only help if it could be guaranteed that the £8160 wouldn’t reappear.
Anybody got any ideas how to get this sorted / escalated??
Technical help, Employers helpline, PAYE then technical help again.
Nobody has heard of this happening before and because they can’t see the physical P60 it’s difficult to explain to them. If they could see that it’s blindingly obvious.
.
I’ve done an EYU in the hope it would reset but it won’t go through
possibly because the figures I’m submitting are exactly the same as previous. And it would only help if it could be guaranteed that the £8160 wouldn’t reappear.Anybody got any ideas how to get this sorted / escalated??
I'm a little confused.
From what you've shown us it appears a tax rebate was incorrectly calculated for your wife of about £6k. Is this the case? If so, are HMRC not just asking for their incorrectly paid rebate back?
But, you say she's never received a rebate. You also say your company never received a rebate. But, if the payslips are showing -ve tax paid there must be some sort of rebate/netting of taking place.
Have you checked your company's payments made to HMRC to see the money taken matches the monthly payroll submission?
If I was in your position the first thing I'd do is reconcile all payments made to HMRC against the underlying records. These would include VAT (if applicable), corporation tax and PAYE. You should be able to do at least 6 years as you're legally obliged to keep those in the business. I'd then reconcile your wife's PAYE returns highlighting the incorrect year. I'd even include the payments made to her from the company bank account to prove what cash she actually received. I'll admit this could well be time consuming and tedious, but there does appear to be £6k at stake plus any penalties for late submission.
Once you've worked out the true position, write to HMRC setting it out with your proposed course of action to resolve it.
From what you've shown us it appears a tax rebate was incorrectly calculated for your wife of about £6k. Is this the case? If so, are HMRC not just asking for their incorrectly paid rebate back?
But, you say she's never received a rebate. You also say your company never received a rebate. But, if the payslips are showing -ve tax paid there must be some sort of rebate/netting of taking place.
Have you checked your company's payments made to HMRC to see the money taken matches the monthly payroll submission?
If I was in your position the first thing I'd do is reconcile all payments made to HMRC against the underlying records. These would include VAT (if applicable), corporation tax and PAYE. You should be able to do at least 6 years as you're legally obliged to keep those in the business. I'd then reconcile your wife's PAYE returns highlighting the incorrect year. I'd even include the payments made to her from the company bank account to prove what cash she actually received. I'll admit this could well be time consuming and tedious, but there does appear to be £6k at stake plus any penalties for late submission.
Once you've worked out the true position, write to HMRC setting it out with your proposed course of action to resolve it.
The top line is the problem.
The £8160 was her earnings for 2018-19. Somehow this figure has appeared as other income from a previous employer in year 19-20. BUT it shows they have been taxed the full amount of £8160.
So in the total for the year the first line says she has already paid £8160 in tax. (which obviously she didn't as that £8160 simply shouldn't exist)
So the tax refund of £6814 is simply an attempt by HMRC software to balance the tax over the tax year.
What I need is for the figure(s) of £8160 to be removed from the P60 altogether and a recalculation would solve the problem.
In this employment income £7898 Tax deducted £0.00.
But I can't find anyone who either understands the problem or can fix it. Nothing I can input or have inputted in year 19-20 can influence that figure from a mythical previous employer.
Drawweight said:
The top line is the problem.
The £8160 was her earnings for 2018-19. Somehow this figure has appeared as other income from a previous employer in year 19-20. BUT it shows they have been taxed the full amount of £8160.
So in the total for the year the first line says she has already paid £8160 in tax. (which obviously she didn't as that £8160 simply shouldn't exist)
So the tax refund of £6814 is simply an attempt by HMRC software to balance the tax over the tax year.
What I need is for the figure(s) of £8160 to be removed from the P60 altogether and a recalculation would solve the problem.
In this employment income £7898 Tax deducted £0.00.
But I can't find anyone who either understands the problem or can fix it. Nothing I can input or have inputted in year 19-20 can influence that figure from a mythical previous employer.
Yes, you do need to correct the input error but more importantly you need to get HMRC off your back with regard to asking for the cash back. I still think you need to check to see what HMRC actually did with regard to the refund. Did your company make a reduced PAYE deduction at some time during the year in question to take the refund into account? If so, you've had the cash and HMRC are in the right to chase for it to be paid back.The £8160 was her earnings for 2018-19. Somehow this figure has appeared as other income from a previous employer in year 19-20. BUT it shows they have been taxed the full amount of £8160.
So in the total for the year the first line says she has already paid £8160 in tax. (which obviously she didn't as that £8160 simply shouldn't exist)
So the tax refund of £6814 is simply an attempt by HMRC software to balance the tax over the tax year.
What I need is for the figure(s) of £8160 to be removed from the P60 altogether and a recalculation would solve the problem.
In this employment income £7898 Tax deducted £0.00.
But I can't find anyone who either understands the problem or can fix it. Nothing I can input or have inputted in year 19-20 can influence that figure from a mythical previous employer.
When you say nobody understands the problem I assume you mean at HMRC; I'm surprised nobody understands the problem as it's quite easy to understand, they want money back for a tax rebate that, as far as you're concerned, never happened. I can understand you struggling to find someone who knows what to do about it to resolve the issue.
But, as I said before, until you can prove the rebate never happened I think you're on thin ice getting HMRC to go away. Their view, as it always is with tax, rightly or wrongly, is you're guilty until you prove your innocence. Unfortunately, the only way to prove your innocence to do the work I mentioned previously. I've had this sort of issue with a number of clients and in all cases, showing HMRC the actual figures solved the issue pretty quickly; either HMRC accepted their error, or the client realised HMRC were actually right (it does happen sometimes
). Well progress of a kind.
I phoned up again to see why them EYU couldn’t go through to discover they can’t do it because my business closed April 2020. Fair enough so that was one avenue closed.
Then I got transferred to someone else and while I was explaining my predicament he went into my account and said ‘You do realise there’s a balance of £6828 in your account’? Eh what????.
Ideal I thought, to be frank I don’t care how it got there just send it to me and I’ll get my OH to pay off the HMRC bill.
Sorry, because you’ve queried the fact it shouldn’t be there I’ll have to escalate it up to authorise payment. Which won’t be till 8th of March.
So I log into the business account and there’s no sign of this £6828 anywhere. No regular payments into my account for the 7 months my OH should have been getting a tax refund….zero.
On the phone yet again. ‘Can you check my account for any balance’. They couldn’t find anything and no notes on my file about any refund in process. At this point I’m losing the will to live.
On the phone yet again as it was unclear if my businesses were actually closed. I had conflicting opinions from several of the helplines so I went on to check. Fortunately they had been closed correctly. Whilst on I asked the person to check my balance again and there was a note about the £6828 being escalated so that’s something at least.
I think the only way out of this is accept the refund (if it turns up) and use the money to pay off my OH’s demand. I don’t like the idea of it not getting sorted out correctly but nobody is willing to step up and correct the initial error. Even if that is fixed that cascades right through, which means the tax refunds would need to be removed from my wife’s account and the deposits would have to be removed from my business account. And to be perfectly frank after the trouble I’ve had I don’t trust them to do it correctly.
I’m going to see an accountant after the holidays to get his opinion. Even if he can find this invisible £6828 so that I can actually see it he’ll be worth the money.
Sorry for the ramble. It’s cathartic if nothing else.
Update but not what I was hoping for.
My refund came which I then used to pay off the tax demand for my wife. In other words I used the refund I shouldn’t have got to pay off the demand she shouldn’t have got!
I thought this was closed till I received this
So now after me telling them there was an error and them not being able to find it they have suddenly found part of it 2 and a half years after it was submitted.
I can’t do an EYU because my account is no longer active and it’s pointless phoning and trying to explain because nobody can understand the problem.
I’m just not going to lose sleep over it and fire it off to an accountant friend.
Write to them. I had a similar mess to sort out with them some years ago, the fines kept keeping and trying to get someone to sort it over the phone was a completely fruitless exercise. So I put all the evidence together, used ELI5 wording, got my highlighter pen out, along with my box of upper case bold letters for extra effect, and send them a massive envelope of paperwork via recorded delivery.
2 weeks letter I got a blank acknowledgement slip back. Then a further 5 months went by until a letter landed, thanking me for the detailed explanation and paperwork, they could see what the error was and had corrected it on my file, cancelled all penalties and would be issuing a refund letter in the next few days. It was a painless process and I should have done that from the start.
You have to remember this is HMRC who are still stuck in the dark ages and employ people who are not the brightest of crayons, so the cogs turn extremely slowly even with the simplest of cases. Use wording as if you're explaning the problem to a 5 year old and you'll get it sorted, eventually. Meanwhile, don't worry about any penalty letters, just pop them to one side and carry on with your life.
2 weeks letter I got a blank acknowledgement slip back. Then a further 5 months went by until a letter landed, thanking me for the detailed explanation and paperwork, they could see what the error was and had corrected it on my file, cancelled all penalties and would be issuing a refund letter in the next few days. It was a painless process and I should have done that from the start.
You have to remember this is HMRC who are still stuck in the dark ages and employ people who are not the brightest of crayons, so the cogs turn extremely slowly even with the simplest of cases. Use wording as if you're explaning the problem to a 5 year old and you'll get it sorted, eventually. Meanwhile, don't worry about any penalty letters, just pop them to one side and carry on with your life.
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