HMRC error, underpaid tax

[CYNthesys]

Earlier this year my daughter received a tax coding notice for 2013/14

Her code had been lowered because the taxman alleged she had underpaid tax amounting to £524.80 and they were intending to recover it during 2013/2014. On 15th February she wrote the following to HMRC: -

Dear Sirs
I am in receipt of a coding notice for the year 2013-2014, and I am concerned by your claim that I have underpaid income tax in the sum of £524.80. The notice does not state the tax year to which this alleged underpayment relates.
I do not know how you have arrived at this as my circumstances have not changed in any way and Income Tax is deducted from my wages under the PAYE scheme.
If an alleged underpayment has resulted due to an error, any such error is not of my making, and I do not accept any liability or responsibility for someone else’s mistakes.
In the circumstances to expect me to pay extra Income Tax of around £10.00 per week would be deemed grossly unreasonable and unfair, quite apart from the fact that it would cause me extreme hardship.
Please provide me with a full explanation, as to how this alleged underpayment arose, eg did HMRC issue an incorrect code to my employer, did it result from HMRC’s new IT system, or did my employer apply a wrong code to my wages.
Given that the new tax year is fast approaching I trust you will deal with this as a matter of urgency, and I look forward to hearing from you very shortly.


She never received a reply, so telephoned them today. She came off the phone really upset, the guy she spoke to said the underpayment related to 2011/2012 and insisted that HMRC were not at fault as her employer had been issued with the correct code. His manner and attitude was appalling, when my daughter pointed out HMRC's failure to reply to her letter he replied, well thats in the past. (She ought to have said, and so is the alleged tax underpayment)

Daughter has been in same employment for nearly 4 years, no change of circumstances whatsoever so she contacted payroll. Payroll said that that HMRC sent them a new code for my daughter for 2011/2012, and they have kindly provided her with a copy.

Ive been looking up ESC19/HMRC errors and the 12 month rule, but it seems that this rule applies if HMRC have failed to update change of circumstances and correct an error within 12 months of the tax year end. In my daughters case there have been no change of circumstances, so Im looking for the best way to approach this.

Help please

[gaz2006]

Re: HMRC error, underpaid tax

youll find it very very hard to win with HMRC they are hard ruthless dont listen and dont care you can make complaint go up ladder and take to adjudicator but i dont think you will get anywhere sorry

[leclerc]

Re: HMRC error, underpaid tax

Can she appeal their decision now that she has the tax form?

Does she have her P60 for that tax year and has she compared that to the tax code she was given?

[alham]

Re: HMRC error, underpaid tax

When was a new 2011/12 code issued? Was it applied to her payments (it should appear on the payslips). It sounds like a resurrection of HMRCs mistakes from 2010/11 (remember the noise in the media of a few years ago?). May be worth a quick note to the MP.

[CYNthesys]

Re: HMRC error, underpaid tax

The new 2011/12 code was issued electronically direct to her employer a few weeks before 6th April 2011. She never personally received a new coding notice

Her employer applied the new 2011/12 code as instructed, to her salary commencing April 2011. I think the error resulted from HMRCs new IT system
http://www.money.co.uk/article/10058...ns-for-you.htm

[TUTTSI]

Re: HMRC error, underpaid tax

Thanks for you PM Cyn,

Theere is a high frequency of incorrect tax codes issued by HMRC. I would have thought though that your daughter would have received a tax code as well?

You cantry ESC19 and see what happens but you have a weak case if tax is due even if it is the HMRC's fault or even her employer if they have not applied the correct coding. If she had received the copy of the tax code notice which should have been operated, HMRC couldargue that the employee should have told the employer that the wrong code wasbeing operated.

I think the best she can achieve is to get the underpayment spread over the new tax year rather that pay in one hit. Was she aware that she was paying an incorrect amount of money in relation to her taxes?

From April PAYE matters are going realtime no more waiting to an end of the year to wait fior the P35/P60's.... the employer will have to notify HMRC everytime someone gets paid, plus they will have to have so much more information on every person employed. It is like 'Big Brother' watching, scary aint it?

[CYNthesys]

Re: HMRC error, underpaid tax

Hi Tuttsi

She wasnt aware she was underpaying tax, I suspect that very few 23 year olds would even have a clue

Apparently HMRC issued her with a pensionsers code (Y), if she had been a pensioner she shouldnt have been having NI deducted from her wages.

She started her job on 1st April 2010 and has worked for the same firm since, no second job, no company car, no perks. Tax for 2010/2011 seems to be correct, but for some unknown reason HMRC issued her employer with a new tax code for 2011/12, this has been operated for 2012/2013 as well, so it seems there will be an underpayment for this year as well.
It seems that HMRC are in breach of their own rules, her change of circumstances, ie her change of job occurred more than 2 years prior to HMRC realising its own error.

[enquirer]

Re: HMRC error, underpaid tax

You should have been given the option of paying in full or by installments.

If the error is demonstrably theirs, it can be appealed. If it is the employers, then you can apply to have the liability transferred to the employer.

Demand that they show their workings, in detail. An acquaintance who works for the IR informs me that they are often completely unable to do so.

[wales01man]

Re: HMRC error, underpaid tax

by altering the tax code isnt the repayment paid back over the year?

[CYNthesys]

Re: HMRC error, underpaid tax

Yes HMRC has altered her code for 2013/2014 to recover the underpayment, but the error is definately the fault of HMRC. They electronically sent her employer a new code to operate for 2011/12 and her employer simply complied with HMRC instructions resulting in an underpayment of Tax
HMRC insist they provided her employer with a different code, but her employer has now provided her with a copy of the electronically code, which proves that HMRC are lying

[CYNthesys]

Re: HMRC error, underpaid tax

Sorry, forgot to update this thread

Daughter won against the Taxman, resulting in HMRC writing off the underpayment

[TUTTSI]

Re: HMRC error, underpaid tax

Fantastic result Cyn, well done to you and your daughter. HMRC should not mess with a Beagle.xx

Sorry, forgot to update this thread

Daughter won against the Taxman, resulting in HMRC writing off the underpayment

[Inca]

Re: HMRC error, underpaid tax

HMRC sent my son a bill (160 quid) ....but on their sheet merrily sat his JSA payments of £900.....he's never been on JSA !

Soon sorted them out with a stiff 'prove it..you plums' letter

[CYNthesys]

Re: HMRC error, underpaid tax

Further update
Daughter v HMRC
SCORE 2-0
Following the fiasco for tax year 2011/12,when HMRC issued daughter's employer with a wrong code, as it wasnt discovered until early this year, it hadnt been corrected for tax year 2012/13 and she was asked her to pay an underpayment of £387.00. Appealed it again for my daughter, and she now has a letter of apology and the £387.00 has been written off.

[Brynithel3]

Re: HMRC error, underpaid tax

I have a problem with HMRC trying to reclaim £2700 in underpaid tax for years 10/11, 11/12 and 12/13. I retired 5 years ago and was in receipt of two pensions after 18 months I felt as though I was not paying enough tax so I rang HMRC to report this. They told me that they would review my codes and inform the pension providers. Two years later I still felt I was not paying enough tax so I contacted them again. They informed me that I had underpaid over £2000 in tax and would amend the codes to reclaim it over three years. I contacted them again two weeks ago to explain that I still did not feel that they were taking enough tax and they said that I had underpaid again by approx. £100. I received a letter explaining how they would recover the tax by dropping my code to 12L this year which would recover £614 next year they plan to recover £1500 and the third year £614. I contacted them again yesterday to ask if they could equal the repayments out over the three years. It was while I was talking to them on the telephone I started researching this on the Web. It seems I have been too honest. The person I talked to this time said he would put a referral through to wipe out £280 of the debt and to see if they could even out the payments. He couldn't put me through to an advisor to appeal these demands. So today I telephoned again spoke to an advisor who wasn't very helpful and gave reasons why I feel I should be be held responsible for this underpayment.
Please can anyone help?