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ChumpusRex

Why Does Tax Have To Be So Taxing?

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After fighting with one employer for 3 months to get a P45, and after having undergone one tax investigation for 2011/12, I thought that would be all.

Nope. Just 1 month after an investigation found I had overpaid tax and sent me a refund, I've now been investigated again and found that I have underpaid and am liable for fines + interest (at a punitive rate).

So, you'd think you could rely on your P45/P60 and payslips when preparing a tax return. Nope.

Turns out that the P45 and payslips were wrong. I had done a few hours of overtime shift in my last month, and although I was paid, this payment wasn't reflected on the P45 or payslip - despite going through on the same day (as a separate BACS payment). Apparently, there was a payslip, but HR kindly sent it in the internal post, where presumably it still sits in the "uncollected post" pile in the post-room. By the time it came to send in the tax return, I'd forgotten all about it, and had no written statement of it.

Interestingly, the underpayment is significantly less than the overpayment (due to another HR department's screw up, by sending the wrong employment dates to HMRC). However, that doesn't seem to want to stop HMRC wanting to extract a significant fine for that.

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I understand the motives for your rant. However I think your post is a bit light on facts. Generally tax returns can be amended within 12 months of the normal 31 January filing deadline. So I find it puzzling that a P45 would sit in an uncollected post tray for such a long time. There are also other avenues to explore, the main one being that HMRC will have been notified by your employer of your salary and benefits as part of the employers year end process. Quite why HMRC would raise two investigations into your tax returns for PAYE surprises me.

You really should appeal to HMRC against the penalties.

Have a look at Tax Aid

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I understand the motives for your rant. However I think your post is a bit light on facts. Generally tax returns can be amended within 12 months of the normal 31 January filing deadline. So I find it puzzling that a P45 would sit in an uncollected post tray for such a long time. There are also other avenues to explore, the main one being that HMRC will have been notified by your employer of your salary and benefits as part of the employers year end process. Quite why HMRC would raise two investigations into your tax returns for PAYE surprises me.

You really should appeal to HMRC against the penalties.

I got the P45 and last regular payslip as part of the leaving pack - but it didn't include the final payment. There was another payslip raised on the last day, which was sent internally, but did not arrive internally until after I'd left. As to the uncollected post, there was no internal procedure to deal with it. It just piled up, until eventually someone would put a notice on the pile, saying collect your post by dd/mm/yyyy or it will go in the skip.

The employers year end process is how this came about. The end-of-year employers figures didn't tally with the tax return.

The first investigation was apparently a different branch, something to do with NICs - there was a discrepancy because when I changed jobs part way through the year, one employer got the dates wrong on the return, so I paid the wrong amount of NI. (It was actually even more complicated in that, as a different employer had kept me on the payroll for months after I'd left, despite multiple requests for a P45, so this didn't help matters either).

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After fighting with one employer for 3 months to get a P45, and after having undergone one tax investigation for 2011/12, I thought that would be all.

Nope. Just 1 month after an investigation found I had overpaid tax and sent me a refund, I've now been investigated again and found that I have underpaid and am liable for fines + interest (at a punitive rate).

So, you'd think you could rely on your P45/P60 and payslips when preparing a tax return. Nope.

Turns out that the P45 and payslips were wrong. I had done a few hours of overtime shift in my last month, and although I was paid, this payment wasn't reflected on the P45 or payslip - despite going through on the same day (as a separate BACS payment). Apparently, there was a payslip, but HR kindly sent it in the internal post, where presumably it still sits in the "uncollected post" pile in the post-room. By the time it came to send in the tax return, I'd forgotten all about it, and had no written statement of it.

Interestingly, the underpayment is significantly less than the overpayment (due to another HR department's screw up, by sending the wrong employment dates to HMRC). However, that doesn't seem to want to stop HMRC wanting to extract a significant fine for that.

I assume that you were not with the employer on 5 April 2012 so did not receive a P60 from them.

Did you give your new employer the P45 and did they then give you a P60 at the End Of Year ?

Did the underpayment of tax arise purely because your employer failed to operate PAYE on a payment or because the extra money received pushed your total income in the year into a higher tax band leading to a potential underpayment at the year end ?

If your employer failed to deduct tax correctly from the final payment made to you then they are in breach of the PAYE regulations and they are liable for any shortfall of tax not you. The guidelines on payments made after a P45 has been issued are pretty specific. They can be found in CWG2 Employer Further Guide to PAYE and NICs for 2011-12 pages 15 (Standard payments made when or after, an employee leaves) and pages 100 (Payments you make when an employee stops working for you).

http://www.hmrc.gov.uk/guidance/2011/cwg2.pdf

They key statement is

For PAYE purposes

If you have already given an employee a form P45

you should deduct PAYE using code 0T

(non-cumulatively) using the normal pay period for

the employee (for example, monthly or weekly), at the

time you make the payment. Write code ‘0T’ as the

amended code on form P11 and enter details of the

payment and PAYE deducted.

In such cases, you should provide the employee

with documentary confirmation of the payment (for

example by letter, payslip or other printed/printable

document) giving the following details:

• the date of the payment(s)

• the gross amount of each payment

• the amount of PAYE deducted from

each payment

• confirmation that the payment is a post

leaving payment.

You must not give the employee another form P45.

You do not need to notify us at the time of making

the extra payment, although you must ensure that it

is recorded on form P14 at the end of the tax year.

As far as I can see if the employer has followed this procedure and applied an OT coding then you should not have a tax underpayment unless subsequent earnings pushed your total income for the year into a higher tax bracket. The only issue then would be whether it is equitable for HMRC to punish you with penalties and interest for the employers failure to provide you with documentary evidence of these earnings which you then failed to include on your own tax return. I suspect the statutory rules around such matters are a lot vaguer than those governing P45s and P60s as there is no mechanism within the PAYE system whereby information about such post P45 payments could be passed onto a new employer and so be picked up by your end of year P60. I would make this my point of appeal by claiming that while you accept it is an individuals duty to declare their income it is inequitable of HMRC to set up a process for recording details of the earnings received by an employee and PAYE deductions made from their wages that does not guarantee the information to show up on either the form P45 or the annual form P60. I would then offer to pay any equitable tax liability arising on any earnings over and above the PAYE deductions (ie any higher rate tax due on income that an employer could not reasonably be expected to have deducted under PAYE) but ask for penalties and interest to be waived.

http://www.hmrc.gov.uk/complaints-appeals/how-to-appeal/direct-tax.htm

BTW if you feel you have been a victim of maladministration by HMRC then you should raise an official complaint

http://www.hmrc.gov.uk/complaints-appeals/how-to-complain/index.htm

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It sounds like one or more of your previous employers has done something to send up a red flag with HMRC to trigger two investigations in such close proximity. I had an investigation that the result was a large refund owed and it was incredibly hard work to get payment from them.

Taxation in this country is in urgent need of reform. I suspect the bulk of returns not completed be a tax professional would be innumerate nonsense, yet the vast majority are never subject to investigation.

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http://www.hmrc.gov.uk/guidance/2011/cwg2.pdf

They key statement is

As far as I can see if the employer has followed this procedure and applied an OT coding then you should not have a tax underpayment unless subsequent earnings pushed your total income for the year into a higher tax bracket. The only issue then would be whether it is equitable for HMRC to punish you with penalties and interest for the employers failure to provide you with documentary evidence of these earnings which you then failed to include on your own tax return. I suspect the statutory rules around such matters are a lot vaguer than those governing P45s and P60s as there is no mechanism within the PAYE system whereby information about such post P45 payments could be passed onto a new employer and so be picked up by your end of year P60. I would make this my point of appeal by claiming that while you accept it is an individuals duty to declare their income it is inequitable of HMRC to set up a process for recording details of the earnings received by an employee and PAYE deductions made from their wages that does not guarantee the information to show up on either the form P45 or the annual form P60. I would then offer to pay any equitable tax liability arising on any earnings over and above the PAYE deductions (ie any higher rate tax due on income that an employer could not reasonably be expected to have deducted under PAYE) but ask for penalties and interest to be waived.

http://www.hmrc.gov.uk/complaints-appeals/how-to-appeal/direct-tax.htm

BTW if you feel you have been a victim of maladministration by HMRC then you should raise an official complaint

http://www.hmrc.gov.uk/complaints-appeals/how-to-complain/index.htm

Real-time reporting should theoretically solve this issue but I'm not holding my breath.

It's way past the point where a system should be operating where any employer can simply log on to an HMRC website and enter anyone's NI number and the amount they wish to pay them gross and the sum be direct debited from the employer's account and split with any PAYE&NI due going directly to HMRC and the net payment straight to an employee's account associated with their NI number.

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I assume that you were not with the employer on 5 April 2012 so did not receive a P60 from them.

Correct.

Did you give your new employer the P45 and did they then give you a P60 at the End Of Year ?

The next employer did get the P45. I left them before the end of the year, and got a P45 eventually (months after I left, because their payroll messed up.)

Did the underpayment of tax arise purely because your employer failed to operate PAYE on a payment or because the extra money received pushed your total income in the year into a higher tax band leading to a potential underpayment at the year end ?

No. The underpayment arose because I filled in a self-assessment return based upon the P45 I received from employer 1. As a result, I quoted incorrect earnings on the SA form. I subsequently received a refund on the basis of the SA form. Subsequently it appears that HMRC noticed that the earnings figures on my self-assessment form didn't correspond with their PAYE database.

If your employer failed to deduct tax correctly from the final payment made to you then they are in breach of the PAYE regulations and they are liable for any shortfall of tax not you. The guidelines on payments made after a P45 has been issued are pretty specific. They can be found in CWG2 Employer Further Guide to PAYE and NICs for 2011-12 pages 15 (Standard payments made when or after, an employee leaves) and pages 100 (Payments you make when an employee stops working for you).

I'm guessing that they deducted the correct amount of tax, but I don't know as I haven't yet got the copy payslip from them, although sticking some numbers into a spreadsheet suggests that they did.

It sounds like one or more of your previous employers has done something to send up a red flag with HMRC to trigger two investigations in such close proximity. I had an investigation that the result was a large refund owed and it was incredibly hard work to get payment from them.

The first investigation was something to do with NI contributions. Because of delayed P45s from another employer, there was a problem with too many NI payments (essentially I was double paying NI because of the delay in issuing the P45 after I left one employer).

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Flaming heck. These guys just don't stop.

The above issue was sorted, and the shortfall paid by bank-transfer on the day of receipt. Apparently, however, that's not good enough for HMRC. Apparently the penalty charges calculated were based upon payment of the corrected tax bill on the day it was sent, and not the day it was received.

So, the result is that additional penalties and interest have now been added, and I'm now getting threatening demands for these penalties and interest. Of course, the best bit is the amount of the final short fall: 7p

I'm tempted to send them a cheque just to spite them and make them work for their money.

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So, the result is that additional penalties and interest have now been added, and I'm now getting threatening demands for these penalties and interest. Of course, the best bit is the amount of the final short fall: 7p

I'm tempted to send them a cheque just to spite them and make them work for their money.

Go for it, I've sent the barstewards a cheque for 14 pence in the past. I figured it would cost them more to process it than it was worth, which made it all worthwhile!

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So, the result is that additional penalties and interest have now been added, and I'm now getting threatening demands for these penalties and interest. Of course, the best bit is the amount of the final short fall: 7p

Ask to pay in 7 monthly instalments, then send them a 1p coin (legal tender, they can't refuse it) each month... :D

---

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So, the result is that additional penalties and interest have now been added, and I'm now getting threatening demands for these penalties and interest. Of course, the best bit is the amount of the final short fall: 7p

I'm tempted to send them a cheque just to spite them and make them work for their money.

I once used their online facility to pay them 10p by debit card. January '08, it seems.

I derived a certain hollow satisfaction from the expectation that they'd pay more than 10p in transaction charges to receive my 10p.

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Flaming heck. These guys just don't stop.

The above issue was sorted, and the shortfall paid by bank-transfer on the day of receipt. Apparently, however, that's not good enough for HMRC. Apparently the penalty charges calculated were based upon payment of the corrected tax bill on the day it was sent, and not the day it was received.

So, the result is that additional penalties and interest have now been added, and I'm now getting threatening demands for these penalties and interest. Of course, the best bit is the amount of the final short fall: 7p

I'm tempted to send them a cheque just to spite them and make them work for their money.

Now you see just what sort of anally retentive, power-tripping, worthless parasite a person has to be to choose a career with HMRC.

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I once used their online facility to pay them 10p by debit card. January '08, it seems.

I derived a certain hollow satisfaction from the expectation that they'd pay more than 10p in transaction charges to receive my 10p.

No, the taxpayer ends up paying that as well, ultimately. Tax Collectors create no service or product of any value, and so derive their own income, wages, expenses, etc., from taxing the rest of us.

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I once used their online facility to pay them 10p by debit card. January '08, it seems.

I derived a certain hollow satisfaction from the expectation that they'd pay more than 10p in transaction charges to receive my 10p.

If your VAT refund is less than a £1 they don't pay it you.

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At last.

The Chumpus rex is flummoxed by something!!:lol:

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Now you see just what sort of anally retentive, power-tripping, worthless parasite a person has to be to choose a career with HMRC.

That's a bit harsh. I've generally found the people at HMRC (when you can get hold of them) to be fairly helpful. I would have thought that Chumpus Rex's problems more likely stem from badly-written software used to automate the process.

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  • 246 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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