Underpayment of TAX!!!!

[ianv5]

I need some advice.

I joined the MOD (Civil service) back in August 2009 and my Tax Code was set at the Basic Rate until April 2012 when it was changed to 810L.

At the same time I have been receiving a pension from the RAF which was taxed and had a Tax coding applied to it (I do not have the Tax code to hand). My pension is now set at the BR (Basic Rate).

I have just received an underpayment of Tax notice for £4595!(period 2011/12)

I did spend 4 months away last year (away again at the moment) where I am receiving a healthy rise in pay during the 4 month period.

Could the fact that I received the additional monies last year while still paying BR tax account for the underpayment tax notice?

Should my employer have checked that my Tax code was/is correct and if not be liable for the underpayment or is it my responsibility to make sure my coding is /was correct?

How does HMRC expect me to pay back £4595 in one lump sum?

Any advice most welcome.

[bacillus]

My wife was in a similiar position to you a couple of years ago.
IMO your first step would be to write back to HMRC and ask for a breakdown as to how they arrived at that figure. You'll then be both reading from the 'same page' so to speak.

As for repayment, they'll most likely change your tax code at source to recover any monies due.

[ianv5]

From my understanding any amount over £3000 will not be taken at source.

Luckily i will have the money to pay but I need to no if i am at fault for not understanding my tax code of my employee.

[RedRobin]

.
Challenge it! Ask for a full explanation and breakdown as bacillus advises. And keep challenging it.

If you can, use a qualified accountant who is experienced in negotiating with the feckers. Ask Citizens Advice Bureau too.

I got a demand for £35k once and my accountant challenged and negotiated it down to £15k.

Tell them you can't afford it and the worst that can happen is that you'll bleed a bit of money slowly and painlessly over a stretched out timeframe. They may want a Court Order just to protect themselves in the event of you defaulting on payments - It's no big deal.

Whatever you do, don't lose any sleep over it. And hopefully, wifey (if you have one) isn't the type to freak out about such matters.

[ianv5]

.
Challenge it! Ask for a full explanation and breakdown as bacillus advises. And keep challenging it.

If you can, use a qualified accountant who is experienced in negotiating with the feckers. Ask Citizens Advice Bureau too.

I got a demand for £35k once and my accountant challenged and negotiated it down to £15k.

Tell them you can't afford it and the worst that can happen is that you'll bleed a bit of money slowly and painlessly over a stretched out timeframe. They may want a Court Order just to protect themselves in the event of you defaulting on payments - It's no big deal.

Whatever you do, don't lose any sleep over it. And hopefully, wifey (if you have one) isn't the type to freak out about such matters.

I had resided to the fact that I had no choice to pay the monies but the more I thought about the more I thought 'this may may not be my fault'.

Wifey is ok about it , I am out the country at the mo fro 4 months helping the troops on ops and will have some time in January to pursue my options, citizens advice might be the first port of call?

[Gene Hunt]

.
Challenge it! Ask for a full explanation and breakdown as bacillus advises. And keep challenging it.

If you can, use a qualified accountant who is experienced in negotiating with the feckers. Ask Citizens Advice Bureau too.

I got a demand for £35k once and my accountant challenged and negotiated it down to £15k.

Tell them you can't afford it and the worst that can happen is that you'll bleed a bit of money slowly and painlessly over a stretched out timeframe. They may want a Court Order just to protect themselves in the event of you defaulting on payments - It's no big deal.

Whatever you do, don't lose any sleep over it. And hopefully, wifey (if you have one) isn't the type to freak out about such matters.

I had resided to the fact that I had no choice to pay the monies but the more I thought about the more I thought 'this may may not be my fault'.

Wifey is ok about it , I am out the country at the mo fro 4 months helping the troops on ops and will have some time in January to pursue my options, citizens advice might be the first port of call?

..........any chance of getting on to the HRMS system & speaking to them?.

[ianv5]

.
Challenge it! Ask for a full explanation and breakdown as bacillus advises. And keep challenging it.

If you can, use a qualified accountant who is experienced in negotiating with the feckers. Ask Citizens Advice Bureau too.

I got a demand for £35k once and my accountant challenged and negotiated it down to £15k.

Tell them you can't afford it and the worst that can happen is that you'll bleed a bit of money slowly and painlessly over a stretched out timeframe. They may want a Court Order just to protect themselves in the event of you defaulting on payments - It's no big deal.

Whatever you do, don't lose any sleep over it. And hopefully, wifey (if you have one) isn't the type to freak out about such matters.

I had resided to the fact that I had no choice to pay the monies but the more I thought about the more I thought 'this may may not be my fault'.

Wifey is ok about it , I am out the country at the mo fro 4 months helping the troops on ops and will have some time in January to pursue my options, citizens advice might be the first port of call?

..........any chance of getting on to the HRMS system & speaking to them?.

I think I will send them a copy of my first post via e-mail. Cannot phone as I am out of the country.

[RedRobin]

^^^^
CAB will definitely have advisors there who know about the best way to deal with this demand. And when they don't, they make an appointment and bring a volunteer specialist in. They will give you complete confidentiality. And their service is free.

Stay in contact with the HMRC and try and delay matters as you are overseas (in the service of your country, no less!) - You don't want them to think that you are running away from them. You can probably get away with leaving any of your responses to them for 10 days or so each time.

The tax office may even have made a mistake - It has been known - Many, many times!!

If you are happy to post updates, I expect that there are a few folks here who will be interested to hear how such a case as yours progresses.

[ianv5]

^^^^
CAB will definitely have advisors there who know about the best way to deal with this demand. And when they don't, they make an appointment and bring a volunteer specialist in. They will give you complete confidentiality. And their service is free.

Stay in contact with the HMRC and try and delay matters as you are overseas (in the service of your country, no less!) - You don't want them to think that you are running away from them. You can probably get away with leaving any of your responses to them for 10 days or so each time.

The tax office may even have made a mistake - It has been known - Many, many times!!

If you are happy to post updates, I expect that there are a few folks here who will be interested to hear how such a case as yours progresses.

Thanks, Robin, I am in the process of dropping an e-mail to my personnel department to see what comes back.

Will update as and when I hear anything.

[RedRobin]

..........any chance of getting on to the HRMS system & speaking to them?.

....The people on the phones at HMRC are certainly better trained to be much more friendly than they used to be in my day, but I would advise getting CAB or professional advice before speaking to them.

It's not a matter of illegal tax evasion but of legal tax avoidance and politely challenging a tax demand. It first needs to be established beyond doubt that the tax is even due at all. It's best to realise that the HMRC taxperson is not on your side but has the job of maximising the tax revenue, so that's why I wouldn't talk to them without first getting advice.

Put you and your family's best interests ahead of HMRC.

If the tax is due, I think you need to stretch out repayment as long as you can and even negotiate that length of time. I take the view that HMRC may be at fault in allowing this build-up of tax to happen, but they won't agree or admit to that.

I can only offer this advice based on my own, not inconsiderable, experiences with tax people.

EDIT: Just read your post:

Thanks, Robin, I am in the process of dropping an e-mail to my personnel department to see what comes back.

....Very good move (it is a bit like a game of chess!) - A Personnel dept will have experience and will be 'on your side' to help you in your best interests.

I would use your service overseas period to delay this if you can. HMRC can wait 4(?) months without any problems!

[garrardrj]

I would contact HMRC and ask them to send you the calculations and reasoning behind their statement you have underpaid Tax.
Hopefully you have your P60 to show how much tax you actually did pay.
Now i don't know your personal income but and underpayment of that amount of money for 2011/12 would indicate to me that you may earn quite a bit !
My income is not a secret and i earn around £40k. My tax code is 850L at moment and was 757L last year.
I pay around £460ish a month tax on 850L......about £5500 a year
I can tell you later what tax i paid last year if that helps later today/tomorrow as my P60's are online !

[RedRobin]

I would contact HMRC and ask them to send you the calculations and reasoning behind their statement you have underpaid Tax.

....I think it better to firstly check if he can get his Personnel dept to do this on his behalf as he is overseas (in service of his country, not on business or on holiday). But I can only say what I would do.

[ianv5]

I would contact HMRC and ask them to send you the calculations and reasoning behind their statement you have underpaid Tax.
Hopefully you have your P60 to show how much tax you actually did pay.
Now i don't know your personal income but and underpayment of that amount of money for 2011/12 would indicate to me that you may earn quite a bit !
My income is not a secret and i earn around £40k. My tax code is 850L at moment and was 757L last year.
I pay around £460ish a month tax on 850L......about £5500 a year
I can tell you later what tax i paid last year if that helps later today/tomorrow as my P60's are online !

When I deploy for 4 months my extra allowances/hazardous duty pay is pretty substantial I normally earn £29500k plus I have my additional RAF pension.

[Gene Hunt]

I would contact HMRC and ask them to send you the calculations and reasoning behind their statement you have underpaid Tax.
Hopefully you have your P60 to show how much tax you actually did pay.
Now i don't know your personal income but and underpayment of that amount of money for 2011/12 would indicate to me that you may earn quite a bit !
My income is not a secret and i earn around £40k. My tax code is 850L at moment and was 757L last year.
I pay around £460ish a month tax on 850L......about £5500 a year
I can tell you later what tax i paid last year if that helps later today/tomorrow as my P60's are online !

When I deploy for 4 months my extra allowances/hazardous duty pay is pretty substantial I normally earn £29500k plus I have my additional RAF pension.

...........over sea's number for HRMS system mate.  +44 1225 829572.

[ianv5]

I would contact HMRC and ask them to send you the calculations and reasoning behind their statement you have underpaid Tax.
Hopefully you have your P60 to show how much tax you actually did pay.
Now i don't know your personal income but and underpayment of that amount of money for 2011/12 would indicate to me that you may earn quite a bit !
My income is not a secret and i earn around £40k. My tax code is 850L at moment and was 757L last year.
I pay around £460ish a month tax on 850L......about £5500 a year
I can tell you later what tax i paid last year if that helps later today/tomorrow as my P60's are online !

When I deploy for 4 months my extra allowances/hazardous duty pay is pretty substantial I normally earn £29500k plus I have my additional RAF pension.

...........over sea's number for HRMS system mate.  +44 1225 829572.

Thanks