Discussion
So the taxman is claiming I underpaid - received a letter yesterday for 2008/09.
Am I right in thinking that as it is over 12 months since the end of the tax year then I have a claim to get the tax written off?
I can't understand why there was an underpayment as I was on PAYE all year with no other earnings, so it wouldn't exactly be complicated to work out my tax.
I'll be firing off a letter shortly, but has anyone on here had any experience with these? Am I likely to be successful?
I appreciate that if they had done the job properly then I would have had to pay it, so overall I don't really 'lose' anything due to their incompetence, but it does grate when you have to write another cheque out simply because they are incapable of operating their own systems. Especially when it is two years later!
Am I right in thinking that as it is over 12 months since the end of the tax year then I have a claim to get the tax written off?
I can't understand why there was an underpayment as I was on PAYE all year with no other earnings, so it wouldn't exactly be complicated to work out my tax.
I'll be firing off a letter shortly, but has anyone on here had any experience with these? Am I likely to be successful?
I appreciate that if they had done the job properly then I would have had to pay it, so overall I don't really 'lose' anything due to their incompetence, but it does grate when you have to write another cheque out simply because they are incapable of operating their own systems. Especially when it is two years later!
There is no time limit in law for the taxman to write off money owed. In practice, they normally will not go back beyond six years - unless fraud is involved.
The error was probably down to the tax coding you were using in 2008/09. Do you know offhand what it was and why it was what it was?
The error was probably down to the tax coding you were using in 2008/09. Do you know offhand what it was and why it was what it was?
Eric Mc said:
The error was probably down to the tax coding you were using in 2008/09. Do you know offhand what it was and why it was what it was?
Absolutely no idea - it would have been pretty standard as I was a 'vanilla' employee (I had a death in service policy and a employer contributed pension but no other benefits). I moved to my then employer in August 2007 and gave them my P45 from my previous employer so presumably they would have had the right tax code as I didn't have any time between employment). They did all the PAYE which I presume was OK for 2007/08 (the year I changed jobs). If there was a change of code required for 2008/09, then I would presume that would be up to HMRC and/or my employer to sort out between them and issue a new code. I was with the same employer for the full tax year 2009/10 (should I expect another letter in respect of this?), and then left them in the 2010/11 tax year and did a self assesment based on the P45 my old employee gave me.A google search pulled up people asking to have their P800's written off under ESC A19 as HMRC had all relevant information and failed to inform the taxpayer of the underpayment within 12 months of the end of the tax year.
In my mind it is either a case that HMRC cocked up (in which case I'd hope ESC A19 might help) or my employer cocked up (in which case I thought HMRC would have to go to the employer first).
If I have to pay it, then fair enough (provided that they give me some time to pay), but it appears to me that there has been a mistake somewhere between employer/HMRC and they've waited 18 months to try to sort it out. Obviously from my point of view, if ESC A19 applies, then I'd like to make use of it.
I've drafted a letter to HMRC asking for an explanation - will be interesting to see how they reply.
You need to find out EXACTLY what happened if you are going to argue your case. You need to dig out your P60 for 5 April 2009 and any P45s issued by employers during 2008/09. You also need to check the Tax Codings used by the employers when computing your PAYE. The tax coding used by the employer will be shown on any P60s and P45s in your possession.
Finally, you need to find the detailed notices of coding issued to you for tax year 2008/09 by HMRC as these will show the codings that SHOULD have been used in that tax year.
Once you have these pieces of paper, you should be able to calculate precisely whta PAYE you SHOULD have paid for 2008/09 and match that against what was ACTUALLY paid for 2008/09.
When you have done that you should be able to tell if HMRC are correct or not in their calculatrion of the underpayment and, if they are correct, you at least will know what went wrong.
Finally, you need to find the detailed notices of coding issued to you for tax year 2008/09 by HMRC as these will show the codings that SHOULD have been used in that tax year.
Once you have these pieces of paper, you should be able to calculate precisely whta PAYE you SHOULD have paid for 2008/09 and match that against what was ACTUALLY paid for 2008/09.
When you have done that you should be able to tell if HMRC are correct or not in their calculatrion of the underpayment and, if they are correct, you at least will know what went wrong.
Eric Mc said:
You need to find out EXACTLY what happened if you are going to argue your case. You need to dig out your P60 for 5 April 2009 and any P45s issued by employers during 2008/09. You also need to check the Tax Codings used by the employers when computing your PAYE. The tax coding used by the employer will be shown on any P60s and P45s in your possession.
Finally, you need to find the detailed notices of coding issued to you for tax year 2008/09 by HMRC as these will show the codings that SHOULD have been used in that tax year.
Once you have these pieces of paper, you should be able to calculate precisely whta PAYE you SHOULD have paid for 2008/09 and match that against what was ACTUALLY paid for 2008/09.
When you have done that you should be able to tell if HMRC are correct or not in their calculatrion of the underpayment and, if they are correct, you at least will know what went wrong.
I've no (or very little) doubt that I've underpaid or else they wouldn't have written to me. I'm more interested in WHY, (and who is to blame for the WHY) coupled with the fact that it has taken so long for this to be raised. Surely if HMRC have the info available now to know that I underpaid, then they had the info at the appropriate time. My understanding of ESC A19 is (in layman's terms) if HMRC fFinally, you need to find the detailed notices of coding issued to you for tax year 2008/09 by HMRC as these will show the codings that SHOULD have been used in that tax year.
Once you have these pieces of paper, you should be able to calculate precisely whta PAYE you SHOULD have paid for 2008/09 and match that against what was ACTUALLY paid for 2008/09.
When you have done that you should be able to tell if HMRC are correct or not in their calculatrion of the underpayment and, if they are correct, you at least will know what went wrong.
k up and you have no reason to question it (i.e. not supplied any wrong info, always supplied info when asked, no reason to question PAYE etc), and they don't deal with it expeditiously (12 months from end of tax year) then you effectively 'get away with paying less tax' - it's their penalty for fking up.Thanks Eric - I'll report back when I get an answer from them. I suspect it will be along the lines of "computer error, not our fault, pay up now" though. Of course it would be nice if it was a mistake of my ex-employers and HMRC had to go against them!
There have been a number of threads on the HMRC PAYE coding debacle. They began to realise they had problems with the coding system in October 2010. The problems occur when people have more than one source of PAYE taxed income during any one tax year. The system finds it difficult to keep up with employment changes, multiple employments held at the same time, or people who have both employment and pension income.
the situation was compounded when they gave up carrying out the normal annual post tax year end reconciliation process due to
a) lack of staff
b) changed priorities in HMRC
c) delays in the implementation of a new software system that would allow much more rapid reconciliation of individuals' incomes from different sources.
The software finally came on line in October 2010 which is what prompted the flood of tax overpayment/underpayment notices. They are still working through the errors highlighted by the new more accurate computer system.
You can clain ESC A19 only if you can prove that
a) you were aware that there was a tax/coding problem
b) that you contacted HMRC and notified them that there was a problem
c) you have documentary evidence that you notified them
PAYE is a three legged stool. Three groups share responsibility for getting it right - the employer, HMRC and the taxpayer.
the situation was compounded when they gave up carrying out the normal annual post tax year end reconciliation process due to
a) lack of staff
b) changed priorities in HMRC
c) delays in the implementation of a new software system that would allow much more rapid reconciliation of individuals' incomes from different sources.
The software finally came on line in October 2010 which is what prompted the flood of tax overpayment/underpayment notices. They are still working through the errors highlighted by the new more accurate computer system.
You can clain ESC A19 only if you can prove that
a) you were aware that there was a tax/coding problem
b) that you contacted HMRC and notified them that there was a problem
c) you have documentary evidence that you notified them
PAYE is a three legged stool. Three groups share responsibility for getting it right - the employer, HMRC and the taxpayer.
Thanks for clarifying Eric (as before, PM me your address and there will be a Christmas bottle winding its way over to you).
Where I fail to understand my problem is that in 2008/09 I only worked for one employer, and had no other income at all, and pretty certain that my benefits didn't change in that time.
I didn't realise that I had to have notified them of an issue - I thought the requirement was that I had a reasonable belief that my tax affairs were in order. I'd based this on the information given here on the HMRC site (please don't think I'm trying to teach my granny how to suck eggs).
In my mind I meet the criteria set out on their web page - although obviously I'm not sure what the relevant information is as I don't know why I underpaid. My basis for this is that they were obviously told 'the relevant information' at some point (because they are now able to calculate that I underpaid).
Thanks for your invaluable help (as always).
Where I fail to understand my problem is that in 2008/09 I only worked for one employer, and had no other income at all, and pretty certain that my benefits didn't change in that time.
I didn't realise that I had to have notified them of an issue - I thought the requirement was that I had a reasonable belief that my tax affairs were in order. I'd based this on the information given here on the HMRC site (please don't think I'm trying to teach my granny how to suck eggs).
In my mind I meet the criteria set out on their web page - although obviously I'm not sure what the relevant information is as I don't know why I underpaid. My basis for this is that they were obviously told 'the relevant information' at some point (because they are now able to calculate that I underpaid).
Thanks for your invaluable help (as always).
Eric Mc said:
Why had you a reasonable belief that your tax affairs were correct?
Because I had no reason to suspect that they weren't. I hadn't received any queries from the previous year(s) and was going through PAYE trusting that my employer was applying payments correctly. The discrepancy isn't particularly noticeable (£500 over a year for a higher rate taxpayer, so not a big % that would stand out). Certainly for that year I was in the same employment as the end of previous tax year, with no changes in benefits.I guess I just presumed that my employer and HMRC could deal with PAYE between them - is that unreasonable?
Actually don't answer that!
Eric Mc said:
Why had you a reasonable belief that your tax affairs were correct?
Eric you're sounding like the Tax man 
, can I turn it around; perhaps like most of us he had no reason to doubt his tax was incorrect, the information was passed and the code issued. As much as it may be as clear as day to you and any other tax professional, it is not reasonable to expect a layman to know better than the professionals, it is an incorrect assumption made too often in these matters, absolving the tax man of any blame even when he gets it wrong. The alternative is everyone goes self assessment and the system melts down inside 6 weeks. As far as I can see the tax man failed to act correctly from the information put in front of him. x years later it is not reasonable to expect joe public to make good that shortfall, you'll be expecting all rape victims to provide their own KY next.
If cornered and before I settle anything like this I'd want to see the P45 of the person that fecked it up in the first instance as a precondition, because the pain and grief these 'minor' errors cause would be considered gross misconduct in most walks of life and lead to dismissal,if nothing else it will concentrate the mind and improve their ability to do it right first time around.
Yes you're right I have no time for bean counters, less so for Tax men...............
Sadly, ignorance of the complexity of the tax system is no defence when you discover you have underpaid your taxes.
I am not bothered whether you like accountants or not. Given that we live in a world where taxes are difficult and complex, maybe being friendly with an accountant might be of more use to you than despising them.
As I said earlier, there are three players in the PAYE system and just because two of the three players have not picked something up that perhaps they should have does not mean that the third player can use that as an excuse for not picking up the error either.
People need to take their tax affairs a bit mmore seriously and perhaps perform their own little reconciliation just after the end of the tax year when they receive their P60s. In all honesty, for the vast bulk of people, performing this check is not that difficult, especially if they have been given some guidance on how to do it.
Asking here on PH would probably give them all the details they need to do to carry out this exercise.
I am not bothered whether you like accountants or not. Given that we live in a world where taxes are difficult and complex, maybe being friendly with an accountant might be of more use to you than despising them.
As I said earlier, there are three players in the PAYE system and just because two of the three players have not picked something up that perhaps they should have does not mean that the third player can use that as an excuse for not picking up the error either.
People need to take their tax affairs a bit mmore seriously and perhaps perform their own little reconciliation just after the end of the tax year when they receive their P60s. In all honesty, for the vast bulk of people, performing this check is not that difficult, especially if they have been given some guidance on how to do it.
Asking here on PH would probably give them all the details they need to do to carry out this exercise.
Eric Mc said:
Asking here on PH would probably give them all the details they need to do to carry out this exercise.
And for that we thank you.If I have to pay, then I have to pay - I've written and asked them why.
If it gives me an angle to say they should write it off or go to my old employers first, then I shall do that. If the rules state that I have to pay tax, then I shall do my utmost to make sure that the taxman follows the rules too.
Eric Mc said:
Sadly, ignorance of the complexity of the tax system is no defence when you discover you have underpaid your taxes.
I am not bothered whether you like accountants or not. Given that we live in a world where taxes are difficult and complex, maybe being friendly with an accountant might be of more use to you than despising them.
As I said earlier, there are three players in the PAYE system and just because two of the three players have not picked something up that perhaps they should have does not mean that the third player can use that as an excuse for not picking up the error either.
People need to take their tax affairs a bit mmore seriously and perhaps perform their own little reconciliation just after the end of the tax year when they receive their P60s. In all honesty, for the vast bulk of people, performing this check is not that difficult, especially if they have been given some guidance on how to do it.
Asking here on PH would probably give them all the details they need to do to carry out this exercise.
I will contend that 'ignorance' or more correctly less well aware and untrained, is a legitimate defence as it will venture into that old English law yard stick/test of reasonableness. Using the three parties are involved in this equation, the recipient is only 33% of the equation and the least qualified, why would his minority input overhaul the 66% professional majority. It is therefore not unreasonable to assume the other two parties have got it right.I am not bothered whether you like accountants or not. Given that we live in a world where taxes are difficult and complex, maybe being friendly with an accountant might be of more use to you than despising them.
As I said earlier, there are three players in the PAYE system and just because two of the three players have not picked something up that perhaps they should have does not mean that the third player can use that as an excuse for not picking up the error either.
People need to take their tax affairs a bit mmore seriously and perhaps perform their own little reconciliation just after the end of the tax year when they receive their P60s. In all honesty, for the vast bulk of people, performing this check is not that difficult, especially if they have been given some guidance on how to do it.
Asking here on PH would probably give them all the details they need to do to carry out this exercise.
Eric, just reread my op and realised you may see it as a dig at you, it was not meant to be, twas more of a broad sweeping statement borne from my frustrations in business.
Whilst I do agree to some extent with Eric that we all have a responsibility to ensure that our tax is done properly, I also agree with HarryW that it is perfectly reasonable for an employee to assume that between the HMRC and an employer, they can issue and use the correct codes.
If an employee had failed to spot an error that meant he was only paying half the necessary tax, then perhaps it is not so unreasonable to expect the employee to pipe up, but when the error means that the employee is still paying 99% of the tax, then it is not unreasonable for it to be missed on the assumption that it looks about right (not being an accountant or familiar with the intricacies of PAYE, BiK, and taxation generally).
Anyway, we will see ...
If an employee had failed to spot an error that meant he was only paying half the necessary tax, then perhaps it is not so unreasonable to expect the employee to pipe up, but when the error means that the employee is still paying 99% of the tax, then it is not unreasonable for it to be missed on the assumption that it looks about right (not being an accountant or familiar with the intricacies of PAYE, BiK, and taxation generally).
Anyway, we will see ...
There is no doubt that tax has become more complex over the last decade or so. However, most British people receive absolutely no training whtsoever in even the most basic workings of the tax system - which to me is almost criminal.
I remember when I was 16 or so in Ireland, we received a rudimentary lesson on how the Irish PAYE system worked so that any of us who were entering the workplace could have half a chance of understanding if our tax and NI (or PRSI as it is called in Ireland) was being deducted properly or not.
From what I have seen here, no one receives even the most basic introduction to tax and PAYE in this country - which is shameful given that every single one of us has to cope with tax and PAYE at some stage in our lives.
You don't have to be a tax expert - just be knowledgeable enough to recognise when there might be a problem.
I remember when I was 16 or so in Ireland, we received a rudimentary lesson on how the Irish PAYE system worked so that any of us who were entering the workplace could have half a chance of understanding if our tax and NI (or PRSI as it is called in Ireland) was being deducted properly or not.
From what I have seen here, no one receives even the most basic introduction to tax and PAYE in this country - which is shameful given that every single one of us has to cope with tax and PAYE at some stage in our lives.
You don't have to be a tax expert - just be knowledgeable enough to recognise when there might be a problem.
go on www.indicator.co.uk there was a piece on PAYE coding and it mentioned how you might be able to move the error back to the employer
OK, quick update.
I got a standard form letter back from HMRC rejecting my application for ESC A19 (as I suspected might happen). Unfortunately they have failed to answer any of the questions raised in my letter to them, so will be getting another copy tomorrow with the questions highlighted to help them out.
What I can tell though is that for some reason a new code was issued in January 2008 (418L) and that my previous employer continued to operate under the old code (603L). I'm not sure why a new code was issued.
Presumably HMRC would have notified my previous employer of the change of code, and that they should have amended their PAYE system accordingly. Can anyone with experience of how this operates confirm?
If I owe the money, then fair enough, but it seems that getting an explanation is like trying to get blood from a stone.
I got a standard form letter back from HMRC rejecting my application for ESC A19 (as I suspected might happen). Unfortunately they have failed to answer any of the questions raised in my letter to them, so will be getting another copy tomorrow with the questions highlighted to help them out.
What I can tell though is that for some reason a new code was issued in January 2008 (418L) and that my previous employer continued to operate under the old code (603L). I'm not sure why a new code was issued.
Presumably HMRC would have notified my previous employer of the change of code, and that they should have amended their PAYE system accordingly. Can anyone with experience of how this operates confirm?
If I owe the money, then fair enough, but it seems that getting an explanation is like trying to get blood from a stone.
therealpigdog said:
OK, quick update.
I got a standard form letter back from HMRC rejecting my application for ESC A19 (as I suspected might happen). Unfortunately they have failed to answer any of the questions raised in my letter to them, so will be getting another copy tomorrow with the questions highlighted to help them out.
What I can tell though is that for some reason a new code was issued in January 2008 (418L) and that my previous employer continued to operate under the old code (603L). I'm not sure why a new code was issued.
Presumably HMRC would have notified my previous employer of the change of code, and that they should have amended their PAYE system accordingly. Can anyone with experience of how this operates confirm?
If I owe the money, then fair enough, but it seems that getting an explanation is like trying to get blood from a stone.
When HMRC amends a tsx code, they are SUPPOSED to issue two copies of thr revised coding, a detailed breakdown of the amended code to the employee and a simplified version of the amended code to the employer. I got a standard form letter back from HMRC rejecting my application for ESC A19 (as I suspected might happen). Unfortunately they have failed to answer any of the questions raised in my letter to them, so will be getting another copy tomorrow with the questions highlighted to help them out.
What I can tell though is that for some reason a new code was issued in January 2008 (418L) and that my previous employer continued to operate under the old code (603L). I'm not sure why a new code was issued.
Presumably HMRC would have notified my previous employer of the change of code, and that they should have amended their PAYE system accordingly. Can anyone with experience of how this operates confirm?
If I owe the money, then fair enough, but it seems that getting an explanation is like trying to get blood from a stone.
This is to ensure that BOTH parties involved (the employee and the employer) have the relevant information in front of them. The EMPLOYEE is requested on their detailed coding notice to contact HMRC if they do not agree with the change to the coding or if they want it explained further.
Because the employer only receives a simplified version of the coding notice, they will not normally be in a position to know if this new coding is correct or not. So, legally, it's the EMPLOYEE who is expected to spot and react to coding errors.
Why was your coding reduced in 2008/09 from 603L to 418L?
That is essentially a reduction of £1,850 in your tax free allowances for that particular tax year.
Why didn't your employer implement the coding change when they should have?
Did they receive the coding change and then forget to apply it?
Did they NOT receive the coding change?
Has HMRC proof that they sent the coding change to either you or the employer?
Can you ask for proof that it was sent?
Edited by Eric Mc on Monday 5th December 16:11
Eric Mc said:
When HMRC amends a tsx code, they are SUPPOSED to issue two copies of thr revised coding, a detailed breakdown of the amended code to the employee and a simplified version of the amended code to the employer.
This is to ensure that BOTH parties involved (the employee and the employer) have the relevant information in front of them. The EMPLOYEE is requested on their detailed coding notice to contact HMRC if they do not agree with the change to the coding or if they want it explained further. I naively presume that the coding is correct - especially as my earnings and benefits were not complex. Lesson learnt!
Because the employer only receives a simplified version of the coding notice, they will not normally be in a position to know if this new coding is correct or not. So, legally, it's the EMPLOYEE who is expected to spot and react to coding errors. Until I get more info, I'm not sure whether it is an error, or the change in code was correct.
Why was your coding reduced in 2008/09 from 603L to 418L? I honestly don't know. I changed job in July 2007, but was on pretty much the same wage and benefits, and had my p45 from my previous employer.
That is essentially a reduction of £1,850 in your tax free allowances for that particular tax year. Does this suggest that my benefits (death in service and pension contribution) were costing my new employer more, or less?
Why didn't your employer implement the coding change when they should have? Good question
Did they receive the coding change and then forget to apply it? Seems likely
Did they NOT receive the coding change? No idea - I haven't spoken to them yet
Has HMRC proof that they sent the coding change to either you or the employer? They failed to answer that question
Can you ask for proof that it was sent?
I can't remember receiving the new coding, but that doesn't mean it wasn't sent to me. I am pretty certain that if I had, then a copy would have been forwarded on to my previous employer's payroll department as I'm pretty good at that sort of thing. I'm also digging through my records to see what I have got.This is to ensure that BOTH parties involved (the employee and the employer) have the relevant information in front of them. The EMPLOYEE is requested on their detailed coding notice to contact HMRC if they do not agree with the change to the coding or if they want it explained further. I naively presume that the coding is correct - especially as my earnings and benefits were not complex. Lesson learnt!
Because the employer only receives a simplified version of the coding notice, they will not normally be in a position to know if this new coding is correct or not. So, legally, it's the EMPLOYEE who is expected to spot and react to coding errors. Until I get more info, I'm not sure whether it is an error, or the change in code was correct.
Why was your coding reduced in 2008/09 from 603L to 418L? I honestly don't know. I changed job in July 2007, but was on pretty much the same wage and benefits, and had my p45 from my previous employer.
That is essentially a reduction of £1,850 in your tax free allowances for that particular tax year. Does this suggest that my benefits (death in service and pension contribution) were costing my new employer more, or less?
Why didn't your employer implement the coding change when they should have? Good question
Did they receive the coding change and then forget to apply it? Seems likely
Did they NOT receive the coding change? No idea - I haven't spoken to them yet
Has HMRC proof that they sent the coding change to either you or the employer? They failed to answer that question
Can you ask for proof that it was sent?
Edited by Eric Mc on Monday 5th December 16:11
On the face of it, it looks like my previous employer didn't apply the correct code. My understanding is that they should be the first port of call for HMRC rather than coming straight for me. again, only my understanding, but if it was an honest mistake on their part, then I am expected to pay, but if they cocked up, then they should foot the bill.
Thanks for your help Eric.
You could try and find out from HMRC if and when they notified the previous employer of teh amended coding. They may have omitted to do so.
But as I keep saying, YOU would have received a copy too. Indeed, your copy would have shown a full explanation as to why the coding was being changed. The employer's version is always much simplified, just showing the bare code without any details as to how the code was atually amended.
But as I keep saying, YOU would have received a copy too. Indeed, your copy would have shown a full explanation as to why the coding was being changed. The employer's version is always much simplified, just showing the bare code without any details as to how the code was atually amended.
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