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Discussion in 'PAYE letters 2010' started by [email protected], Nov 2, 2010.

  1. Judders

    Judders UKBF Newcomer Free Member

    19 2
    Hi Elaine,

    I have checked them.

    They are correct for the last three years, and I have been underpaying due to the BR code. (by 1.9k, 0.5k, 2.4k). The letters do not state this, but it seems the obvious cause.

    I was just mentioning that back in 01, 02, 03 etc I was probably overpaying tax, and certainly the total tax paid was not very different to what I expected to pay. Hence me never picking up on the incorrect tax code.

    Anyway, its a slight aside.

    Given what you now know of my situation do you believe that I have grounds to appeal? If so its letter template 1.

    Is it reasonable of me to expect a correct tax code on PAYE?

    Thanks.
     
    Posted: Nov 30, 2011 By: Judders Member since: Nov 28, 2011
  2. elainec100@cheapaccounting

    [email protected] UKBF Newcomer Full Member

    13,268 2,882
    Without knowing why you are on the BR code I cannot advise. This is the key to your case.

    A correct tax code will be assigned if you provide your employer and HMRC with the correct info.

    Without knowing why you were on the BR code in the first place I cannot comment on who is at fault!
     
    Posted: Nov 30, 2011 By: [email protected] Member since: Nov 4, 2005
  3. Tom McClelland

    Tom McClelland UKBF Ace Full Member

    2,892 789
    It is conceivably even possible that BR was the correct tax code when the OP joined their new company 11 years ago. I would expect it to be virtually impossible for anyone to find out why that happened all those years ago. Perhaps the OP ticked box C on a P46, or perhaps the OP didn't provide a P46 or P45 at all which would automatically in those days cause a BR tax code to be used. (HMRC has since changed procedures and now a missing P46 more correctly generates tax code 0T/W1)

    Presumably HMRC has had all the information it needed to spot the error (in the form of P14 submissions) for the last 7 years, and more. Someone earning more than the base rate bandwidth in one job on code BR should have rung automatic alarm bells at HMRC in any case. Gross dereliction that HMRC didn't pick it up sooner, in my opinion. (not that that necessarily cuts any ice in the appeals process, where Elaine's experience is the best guide of which tack to take)
     
    Posted: Nov 30, 2011 By: Tom McClelland Member since: Feb 10, 2008
  4. elainec100@cheapaccounting

    [email protected] UKBF Newcomer Full Member

    13,268 2,882
    How would HMRC know what code to change it to unless told the circs.

    The usual chain of events is a BR code assigned which is then corrected via a subsequent event e.g. advising HMRC that this is the only job. Then the 'normal' personal allowance would be assigned.


    The crux goes back to the allocation of the BR code and the fact that it has not changed.


    In my experience of handling these HMRC will rule that they acted on info provided i.e. they were not told anything to re-assign the correct code.


    Whilst of course it may be difficult to remember what happened 11 years ago often one does remember what job happened before.


    Whatever happened HMRC have not be advise of the circs, the employer acted on the info provided so I can't see a reason for appeal so far unless more light can be shed on why the BR code was assigned.

    You have to give HMRC some reason to rule in the posters favour!


    HMRC have ruled that a P14 is not reason to change the tax code - I report this, I do not make the rules!
     
    Posted: Nov 30, 2011 By: [email protected] Member since: Nov 4, 2005
  5. Judders

    Judders UKBF Newcomer Free Member

    19 2
    What I don't understand is what is supposed to happen here.

    It wasn't unusual circumstances.

    I cannot remember for sure but lets assume that I filled in P46 - option C?

    - Leave Co. A in June 00
    - Join Co. B in June 00, select "have worked for another company in this tax year, but this is my only job now"
    - Get put on BR code
    - 11 years later get tax bill.

    What steps should have happened in the interim. Should HMRC have issued a coding notice, should my employer have contacted me / HMRC, or should I have just noticed the code BR on the annual P60.

    Help!
     
    Posted: Nov 30, 2011 By: Judders Member since: Nov 28, 2011
  6. elainec100@cheapaccounting

    [email protected] UKBF Newcomer Full Member

    13,268 2,882
    Box C is if you have another job. This is the only box on a P46 that would put you on a BR code.

    If this was ticked then it was incorrect - so your error. This is my point.

    If incorrect it is your responsibility to tell HMRC.


    How can you expect them to know?


    Generally this is used where someone has two jobs or a pension. If their circs change then they tell HMRC.


    Whilst you can't expect everyone to know the tax codes etc you can expect them to inform HMRC and their employer of the correct circs relating to their position.


    Again unless you can shed any light on why the BR was incorrectly assigned (except for you ticking an incorrect box) then I do not see a valid reason for an appeal.
    Of course you are free to get another opinion.


    Good luck but I think I have covered all I can on your case.
     
    Posted: Nov 30, 2011 By: [email protected] Member since: Nov 4, 2005
  7. Judders

    Judders UKBF Newcomer Free Member

    19 2
    Sorry - I mean box B

    "This is now my only job, but since last 6 April
    I have ​
    had another job, or have received
    taxable Jobseeker's Allowance,
    Employment and Support Allowance or
    taxable Incapacity Benefit. I do not receive

    a state or occupational pension."

    I wouldn't have ticked box C.

    So given those facts why on earth was I ever on BR code?

    And what should have happend by whom to pick up on the error?

    Thanks.

     
    Posted: Nov 30, 2011 By: Judders Member since: Nov 28, 2011
  8. elainec100@cheapaccounting

    [email protected] UKBF Newcomer Full Member

    13,268 2,882
    As I think I have said - do you have proof of this?

    You need the P46 to prove this is what happened.

    Check with your employer and find out what happened when you joined.

    You said "I honestly cannot recall whether I handed in a P45, or filled out a P46" so you cannot say that you ticked box B!

    You can only argue the point if you have proof that an error occurred and so far there is none only an assumption that you must have completed a P46 and completed it correctly and someone else, not you, made the mistake.

    With respect, if I can tear this apart HMRC will do a better job of it than me in an A19 appeal!

    HMRC will argue that they acted on the info provided unless you can prove that they did not.

    Again I have nothing further to add as there is still no further proof of an error being made.

    Facts are the only thing you or anyone else can appeal on.
     
    Posted: Nov 30, 2011 By: [email protected] Member since: Nov 4, 2005
  9. Tom McClelland

    Tom McClelland UKBF Ace Full Member

    2,892 789
    Might you conceivably have not filled in a P46 at all, AND not supplied a P45? in which case the correct default action by your employer would have been (at that time) to put you on code BR.

    What should have happened by whom to pick up on the error? Who knows? It appears that HMRC had no systems to detect incorrect tax codes being applied by employers for whatever reason. The employer would have no reason to check, and you thought that everything was AOK. Many higher rate tax payers have at least one other income source, such as bank deposit interest or share dividends, and in such a case your Self Assessment return would automatically have picked up the error and corrected it.

    HMRC should have picked up on the error if they had decent systems and controls, since HMRC had enough information, in the form of P14 submissions from your employer, to see that you were paying the incorrect amount of tax. However, as Elaine has correctly and knowledgably pointed out and I'd forgotten, HMRC has arbitrarily decided that it is allowed to ignore P14s when deciding whether or not it should already have known that an employee was having the wrong amount of tax deducted. I'd love to see that HMRC whim challenged by someone with deep pockets, because I suspect that the judgement would rip HMRC to shreds if it ever got to court, the logic being that P14s are easily the BEST form of information available to HMRC to make the "wrong tax paid" assessment. Far better than the horrifically poor dataset of the start/leave documents that they DO accept as evidence of their error.

    But pragmatically I don't suppose that anyone will challenge this or seek some kind of judicial review of whether HMRC has worded ESC A19 unfairly narrowly to exclude its own inadequacy in interpreting P14s from consideration, because the amount owed by an individual would never cover the cost of the case.

    So, even though the manifest unfairness of the P14 situation is blood-boiling I'll shut up about P14s in future, Elaine, if only to reduce my own blood-pressure. :mad:
     
    Posted: Nov 30, 2011 By: Tom McClelland Member since: Feb 10, 2008
  10. elainec100@cheapaccounting

    [email protected] UKBF Newcomer Full Member

    13,268 2,882
    As I said I only report on the rules - not make them.

    If I had several million in the bank and could retire I'd take up these unjust fights but for now I have to accept life is not always fair and just :eek::eek::eek::eek:

    It sinks but the facts remain that it is the individual's responsibility to check tax codes.
     
    Posted: Nov 30, 2011 By: [email protected] Member since: Nov 4, 2005
  11. Judders

    Judders UKBF Newcomer Free Member

    19 2
    Thanks for all of the advice.

    P45, P46 - I don't know, it was 11.5 years ago. I do know that if I filled in a P46 I would have selected option B as it is the one that applied.

    I therefore assume that probably there was no P45 or 46 as that is the only way I could have ended up on BR.

    Anyway a lot of assumptions. Thanks for your time, I will go for option 1 and see what transpires. I assume that this will at least surface what was supplied when I joined the company and inform my actions from then.

    Thanks, I'll stop with my unanswerable questions now!
     
    Posted: Dec 1, 2011 By: Judders Member since: Nov 28, 2011
  12. Judders

    Judders UKBF Newcomer Free Member

    19 2
    Hi - sorry back again, but emergency situation!

    As you know I got a letter on 28th Nov, and am just forming my reply.

    However went to the cash point and got refused, checked my online banking thinking I must have been defrauded etc. and found out my Salary had gone down by £1600!

    It appears that over 50% of my salary was taken as income tax last month!

    What can I do, surely HMRC can't take this amount without any notice what so ever.

    I am a single income family with a baby, and this makes me £1k overdrawn at the start of December.

    New tax code on payslip 747L (not BR), but no notification.

    I guess contact HMRC and my pay team, but what can I hope for.

    Happy Xmas! :eek:(
     
    Posted: Dec 7, 2011 By: Judders Member since: Nov 28, 2011
  13. Tom McClelland

    Tom McClelland UKBF Ace Full Member

    2,892 789
    This may be no consolation, but all 747L is doing is correcting your recent underpayment of tax between April and October this year. That complete correction has now happened in your current payslip and your pay next month should only be about £200 less than its previous normal value. HMRC isn't collecting any of your past underpayment by giving you that code. At a guess you must be on something around or over £50k/year and you haven't been paying higher rate tax until now, which you should have been paying on your income above c. £42k/year.
     
    Posted: Dec 7, 2011 By: Tom McClelland Member since: Feb 10, 2008
  14. Judders

    Judders UKBF Newcomer Free Member

    19 2
    Hi,

    Thanks for your reply.


    After calming down, I realise that you are obviously correct. This is correctly adjusting my tax situation for this year rather than for previous years. Still not nice before Xmas!


    Two questions arise;
    1) Does the fact that HMRC have now issued me with a new code (without any contact from me) help with route 1 appeal. It surely demonstrates that they had all relevant information to correct the situation and took no action for 11.5 years.

    2) I guess I should speak to my pay services guys about zero notice on this massive pay / tax adjustment! It doesn't seem like very nice practice to just do this with no notice, or just checking whether it would make my family broke!


    Thanks.
     
    Posted: Dec 7, 2011 By: Judders Member since: Nov 28, 2011
  15. deadpixel

    deadpixel UKBF Contributor Free Member

    37 3
    Cheap accounting? how much do you charge for 1 tax return on average?
     
    Posted: Dec 7, 2011 By: deadpixel Member since: Dec 7, 2011
  16. Tom McClelland

    Tom McClelland UKBF Ace Full Member

    2,892 789
    1. No, apparently it doesn't help. Everyone involved knows that HMRC had all the information it needed to spot that your tax was being done incorrectly all along. However HMRCs systems until last year were terrible and they weren't picking this up. On appeal HMRC will only accept very particular and specific failings on its part, to properly recognise and action starter documents from employers (which in your case should have been submitted 11 years ago). HMRC does not accept any responsibility in its appeals process for its other manifest and horrific failures to manage a basically effective PAYE system.

    2. PAYE Deductions made your your employer's payroll department are not a matter of choice. They are a matter of law. When your payroll department received a notice of coding from HMRC it had no choice about what to do, which was to action the new tax code and deduct whatever tax was calculated as a result of that. So I don't think you have any particular grounds to complain to them.
     
    Posted: Dec 8, 2011 By: Tom McClelland Member since: Feb 10, 2008
  17. elainec100@cheapaccounting

    [email protected] UKBF Newcomer Full Member

    13,268 2,882
    self assessment or corporation tax?

    To help - All of our fees are on the web site.
     
    Posted: Dec 8, 2011 By: [email protected] Member since: Nov 4, 2005
  18. Judders

    Judders UKBF Newcomer Free Member

    19 2
    Hi,

    I have spoken to my pay team and asked them why I am on a BR code.

    Their response is "This was the default tax code operated at that time when a P45 was not produced by you from a previous employment. The HMRC have kept you on this coding at each year end when Gross pay and tax figures have been sent to them. You will need to liaise with the Tax office. "

    They also said
    "the Tax office confirmed this code recently when they sent Pay Services a P9 (notice of coding to employers)"

    My understanding is that its the employers responsibility to set up PAYE using a P46 when no P45 is supplied. I am therefore minded to use appeal letter 2, employer not operating PAYE correctly, as BR should only have ever been used on a temporary basis.

    Sound correct?
     
    Posted: Dec 9, 2011 By: Judders Member since: Nov 28, 2011
  19. elainec100@cheapaccounting

    [email protected] UKBF Newcomer Full Member

    13,268 2,882
    No to me - no :rolleyes::rolleyes::rolleyes:

    It is your responsibility to ensure you are on the right tax code and provide an employer and the tax office with the correct information.

    If they got a notice of coding then you will have got one too.

    What has your employer done wrong? They have followed the rules.


    The issue is that the BR code has never changed. That is not your employers fault as they can only change this is advised to do so by HMRC.


    HMRC will only change it if you provide a reason to them to do so.


    The fact that the onus is on the tax payer to know the tax system may be crap but that is how it is I’m afraid.
     
    Posted: Dec 9, 2011 By: [email protected] Member since: Nov 4, 2005
  20. Tom McClelland

    Tom McClelland UKBF Ace Full Member

    2,892 789
    OK, this statement by them isn't quite true. Or certainly not quite complete. When you didn't supply them with the P45 from your previous employer they should have invited you to fill in a P46, and the P46 would have told them what tax code to use. There is no such thing as a "default tax code" unless for some reason you're unwilling or unable to fill in a P46, in which case BR should be used. So you need to ask them why they didn't give you a P46 to fill in? If they didn't give you one then I think you can argue that the employer was at fault.
     
    Posted: Dec 9, 2011 By: Tom McClelland Member since: Feb 10, 2008