Shock PAYE Tax bill

[abbotyobs]

I was away quite a bit last year and so I have only just submitted my online self-assessment tax return for the last tax year to find that I owe the Inland Revenue a large amount.
This is quite strange as my affairs are straightforward and it appears the underpaid tax is as a result of incorrect PAYE/tax code taken direct from source from my HM Forces salary. Has anyone else experienced this-any advice? I know there was a lot in the press last year about incorrect PAYE calculations.
Many thanks.

[Courtney Mil]

I had the same. C*ck up with my RAF pension and my Open University income. They wanted me to pay it in one go. I told them they can have it over many years.

[crystal10]

You need to speak to the JPAC.

[A2QFI]

I had a similar nasty shock last year which I knew couldn't be right. Quick telephone call and it turned out I had made a major mathematical error in my calculations. 2 weeks later I had a recalculated coding notice, followed by a £ three figure refund.

PM me if you want the telephone number of a helpful HMRC Office in Leeds - the one I use, as a civilian as it is nearest to home. I always found PD4 helpful when I was serving.

[Lima Juliet]

My advice is to double-check. The chimps at HMRC are notoriously ****e which is a complete joke considering they have the ability to incorrectly take and ruin lives. Tax should be relatively simple. The first £7475 is Tax free, the next £35k (ie. £42475 total) is taxed at 20% and the rest is at 40% (unless you're CDS!).

Get your total PAYE payable gross salary (less about £30 uniform tax relief per month, up to £243 per month if you get MoD Childcare Vouchers, LOA, Service Charity (Dincome), Service Days Pay Giving and Home to Duty) and pop into the calculator here UK PAYE Income Tax Calculator 2011 salary calculator UK. Updated for 2011 / 2012 tax year. Calculate wages pension national insurance and student loan repayments online.

I found that I was overpaying PAYE by a massive £400 per month. Three 40 minute phone calls to HMRC later and I'm now paying the right amount of Tax. It seems they don't understand the vagueries of our allowance system - I guess we're too small these days for them to learn about our allowances. I even had to explain my AFPS75 lump sum that was supposed to be Tax free - thankfully, they checked and that is safe!

Spend an evening getting your pay statements out and do the maths; it will most likely pay off. If not try offsetting with the last 5-6 years of motor mileage allowance - about 15p per mile, which if you haven't claimed adds up normally to a lot.

Bonne chance!

LJ

[P6 Driver]

Look up "Extra Statutory Concession A19 (ESC A19)" on the HMRC web site. It's to do with incorrect taxing by HMRC when they have been in posession of the relevant information.

Also, it could be worth research on the forums section of the "MoneySavingExpert.com" web site with regard to ESC A19. I wrote two letters earlier this year in response to an HMRC demand for over £2,500 and it was overturned using this regulation.

Good luck.

[Rigga]

As my wife is one of those Chimps that don't do sums correctly (a hoot at parties), I can tell you that the majority of calculations have been conducted incorrectly over many years - but the new HMRC computer system, installed two years ago, is now showing up these miscalculations and is correcting them.
Luckily, the system can only go back a couple of years (rather than the revenues preference of 9 years) and those errors found have to be rectified before the true figures can be calculated.

Even for me, this showed that I had a 9K bill last year and only several hundred refund this year. Believe me, my missus went through those bills very keenly, but couldn't fault them.

Pensions and not notifying the revenue of changes are the most likely reasons for bills. (obviously the revenue wont ever say it's their fault - so it must be yours!)

If you don't understand the Statement - there is a number on the top of the accompanying letter that you should call - not some mates "friendly" number. They should only redirect you to the right office.

[glad rag]

As rigga pointed out, the HMRC are actually getting their house into some sort of order.

So glad [really] that I was unemployed for nearly two years and that their **** ups actully cancelled each other out and I had a rebate after 18 months of worry...


ps the ___ is a logical statement BTW

[Tiger_mate]

Motor Mileage Allowance claims:

Govt allowance for Tax Year 10/11 = 40p 11/12 will be 45p.

RAF paid 25p per mile, therefore 40-25= 15p into the following equation.

15(p) x 40% of total 'miles' claimed = refund

If you have not kept a diary. Then take MMA allowance from JPA printout and divide by .25 = mileage originally claimed. I now repeat the mileage claimed at the end of the route in the comments box. (Having already included it in a box that subsequently disappears.)

This can be retrospectively claimed for 6 years.

Does not include GYH mileage, although I believe it can if the tour is less than two years and therefore temporary in the eyes of HMRC. Dont hold me to ransom on that though.

[glad rag]

TM, Yes it is shocking how this has been going on for years.

[teeteringhead]

I strongly endorse P6 Driver's line on the ESC A19 idea. Last year I got a £6K bill for underpayment in previous years - shock horror - and I am PAYE only.

Basically it says: "You've had the correct info but got it wrong. That's your problem not mine, please write off the debt iaw some regulation."

Result! Bill cancelled - and I too found out about it from Pprune!!

[abbotyobs]

Thanks for the replies-all extremely helpful, I am most grateful. The Extra Statutory Concession A19 is interesting. I will look into and the other info is very cool. Thanks-PPRuNe!

[P6 Driver]

Further to the ESC A19 stuff.

Anecdotally, the response sent by HMRC may be a fairly automatic letter stating that you just have to pay. Look into the appeal process and keep writing - don't accept the first response unless you want to. Use the rules and interpret them pedantically.

In composing your letters, keep them calm and factual - no opinions about the state of the tax affairs or the department administering them - straight facts only.

I'm not trying to teach anyone how to suck eggs with this advice, so hopefully it doesn't come over that way. The reason I am saying this is that I work for a government department (not HMRC!!!) and know the way we handle letters like this.

What I mean is illustrated below - this is the (sanitised) letter I first sent to HMRC.

HM Inspector of Taxes
Pay as You Earn and Self Assessment
Ty Glas
Llanishen
Cardiff
CF14 5YA

Tax Reference: XXXX/XXXXXXXX
National Insurance Number: XX XX XX XX X




Reference: P800T dated XX February 2011

Thank you for sending the above document. I telephoned on XX March 2011 to query this request for the payment of £2XXX.XX and spoke to a lady called Jenny at your call centre, who explained why it had been generated, informing me that this was due to my annual Personal Allowance being applied twice (once against my work salary and again from my Armed Forces pension).

In accordance with Section 3 of the P800 Flyer that was also sent to me, I believe the incorrect deductions to be errors made by HM Revenue and Customs (HMRC), for which I should not be blamed in any way, or have to pay financially for.

My reasoning for this is that each year, I receive a Pension Scheme Newsletter from the Service Personnel and Veterans Agency. I enclose copies of the relevant pages of the 2008 & 2009 Newsletters, highlighting a statement clearly given in both, that;

“Her Majesty’s Revenue and Customs (HMRC) tells Xafinity Paymaster

how much tax to take from your pension.”

This very clear statement of fact indicates to me that if the incorrect amount of tax has been deducted, the fault lays with HMRC alone, and appears simply to be an error made by your department. The statement is clear that I personally have no input as to what rate of tax is applied, and my P60 statements do not break down the rate of tax HMRC has chosen to deduct. I have therefore had no reason to doubt that HM Revenue and Customs have been making the correct deductions.

With reference to Section 3 of the P800 Flyer, I believe that HMRC has always had the relevant information regarding my income from my salary and my Armed Forces Pension, and that HMRC have made the error in applying the Personal Allowance twice.

I request that my liability to pay this uncollected tax is waived, and look forward to your reply.

Yours faithfully,




XXXX XXXXXXXXX

[Pontius Navigator]

Originally Posted by Tiger_mate

Then take MMA allowance from JPA printout and divide by .25 = mileage originally claimed. I now repeat the mileage claimed at the end of the route in the comments box. (Having already included it in a box that subsequently disappears.)

This can be retrospectively claimed for 6 years..

TM, two other wrinkles.

Suppose the JPA authorised journey was 100 miles but you actually did say 110 because you did a detour enroute then you can claim that extra 10 miles at 40p/m.

Suppose you went away on a short course over a weekend. JPAwise you may only have been paid for the one return journey but taxwise you can claim for the weekend return journey as well - again 40p/mile.

If your other hald drove you to the rail station or airport, did you claim the return journey each way, ie 4 trips?

Finally that 6 years also applied (don't know if it still does) to travel claims. The station used to be able to pay up to 3 years late but claims up to 6 years had to go up the line. JPA may allow for late claims too.

[Bengo]

And don't forget that the HMRC 40p a mile no profit rate went up to 45p last April so the difference is between the RAF/RN/Pongo rate (still 25p?) and 45p.

N

[pma 32dd]

Same with me. Challenged £3925 under ESC A19. Took 9 months and they admitted their error and wrote it off. Have since challenged local MP for PAYE being not fit for purpose.

PM me for more details if you want help in writing letters

[whowhenwhy]

Can I add another question to this debate? I've just reclaimed the difference for MMA but got less than I expected. I was told that the tax calculation that HMRC does does not have to take into account the uniform tax relief that we get as that is taken off at source by the MOD. Consequently, the gross pay figure on the P60 is effectively before the uniform tax relief has been added on. Can anyone much cleverer than me explain whether this is right please before I go into bat with HMRC and PSF again?

On a separate note if anyone's interested, I've just had a final answer from HMRC about tax relief on Mess subscriptions. Apparently they're not tax deductible because you do not need to be a member of the mess to allow you to carry out your professional duties. So now I'm wondering whether to have a chat with the Staish and see what he thinks about the statement in QRs or writing a letter to our MP to raise the issue of the discrepancy between QRs and HMRC.

[Melchett01]

On a separate note if anyone's interested, I've just had a final answer from HMRC about tax relief on Mess subscriptions. Apparently they're not tax deductible because you do not need to be a member of the mess to allow you to carry out your professional duties.

Now that has just triggered another separate but related thought. If the criteria for deductions are that they are required as part of your professional duties, does that mean if an individual maintains their own home but is posted to a unit on the other side of the country and thus has to live in during the week, then accommodation charges should be subject to some sort of tax relief?

After all, very few people with their own homes will do the weekly commute out of choice, and to have a long commute at either end of the day on top of long duty hours presents at worst a potential risk from cummulative fatigue during the commute and at best will see a decline in productivity. Therefore, one could argue that living in and thus the associated accommodation charges are a requirement of your professional duties. Just a thought, may be way off and I'm sure there are far more knowledgeable individuals out there that could clear that one up, but for Grade 1 accommodation that could be a couple of grand per year you could claim against if allowed.

[teeteringhead]

I didn't even bother to 'phone first - here's my (redacted) letter:

HMR&C
HM Inspector of Taxes
Customer Operations
PAYE and Self-Assessment
Ty Glas
Llanishen
Cardiff
CF14 5YA

Tax Ref: xxx/xxx

NI No: xx xx xx xx x


Dear Sir,



I am in receipt of the P800 tax calculation for the 2008/09 and 2009/10 tax years
. The calculations indicate that I have a further tax liability. As income tax is deducted at source from my income under PAYE and you were in possession of all the relevant facts regarding my income, I had been unaware that my tax affairs were not in order.



I therefore wish to apply under the provisions of Extra Statutory Concession A19 that the underpayment of tax now being demanded should be written off, on the following grounds:



1. Either the demand for further tax was issued more then 12 months from the end of the tax year in which HMRC was provided with the relevant information to calculate my tax position correctly, 

or HMRC have allowed the arrears to build up over more than one tax year, despite all relevant information being provided to you.

OR

2. HMRC have failed more than once to make use of the relevant information provided to you about my income.



I look forward to receiving your confirmation that the further tax liability will be written off accordingly.




Your faithfully


Teetering StJ Head

and it was (slightly) longer ago than I thought. My letter was sent in November 2010.

[whowhenwhy]

Melchett unfortunately I don't think that will come into that category but there might be others. I was looking at the Mess subscriptions because QRs require us to be Mess members and are therefore a requirement of our employment. Apparently the HMRC tax relief is for membership of professional bodies that are a requirement of our employment, for instance you have to be a member of the British Psychological Society and have liability insurance if you want to be an occupational psychologist. Therefore, you can claim tax relief on the subscriptions for both of these things.