Soldato
For underpayment made 2016-2017 by my employer. Am I still liable? Furthermore, I've only just received the demand and the employer is no longer trading.
Tax office chasing me
- Thread starter ethan
- Start date
Soldato
Did they take the money or did they overpay you?
Tax was deducted automatically through SAGE (if you mean the employer). HMRC are saying enough wasn't paid.
Not the best advice I’ve heard today.
He's wrong anyway .
Just found this: https://taxaid.org.uk/guides/taxpayers/tax-for-employees/underpayments-of-paye
The timescales under ESCA19 are particularly relevant given the fact the demand has only just been received.
I know he’s wrong, that’s why I said it wasn’t the best
Edit: just to be clear, you may be liable, or you may not be. It depends on the actual details.
Haha what?
Soldato
Why’s that funny? I genuinely thought that was true. If it’s not, can one of our experts explain why as I’d like to know for future reference. 
Why’s that funny? I genuinely thought that was true. If it’s not, can one of our experts explain why as I’d like to know for future reference.
It really depends on the reason for the underpayment. Take the following for example:
You are paid £1,000 per moth gross by your employer.
Your employer deducts £200 per month for income tax and employee's national insurance.
You physically receive £800 per month in your bank account and your employer sends the remaining £200 to HMRC.
Now suppose in this example your employer never actually sends the £200 to HMRC. You have still earned £1,000 but you haven't paid any tax because the employer kept it. This isn't your fault, and it would be unfair to expect you to pay what your employer failed to pay over.
Now suppose the exact same scenario but rather than just being the employee, you are actually the sole director of the company. You choose on behalf of the company not to pay the £200 to HMRC. Now, as the controlling mind of the employer you have caused HMRC not to receive your personal taxation. In this instance HMRC have the powers to make you personally liable for the failure of the employer to account for the tax/NIC.
That's one example.
Soldato
However if an error was made by payroll which took £190 from you instead of £200 and paid that to HMRC, and you were paid £810, they would be entitled to seek the £10 underpayment over how many multiples it occurred from you. Depending on the timescales for reclaiming of course.
I always made a point of doing a reconciliation of my tax at least at year end to make sure I was not a significant amount adrift either way. PAYE for a salary is quite straightforward usually.
I always made a point of doing a reconciliation of my tax at least at year end to make sure I was not a significant amount adrift either way. PAYE for a salary is quite straightforward usually.
pretty obvious what you need to do. Contact HMRC.
Without all the details of your employment, tax, ni, overtime, bonuses, student loans, what has been paid, what hasn't been paid etc etc - no one here can tell you whether your liable or not.
Same thing happened to two and a half years back, could have paid them back in one go but opted to pay them back over 3 years.
Sick to death of them really. They've done this on me every year since 2016. I think it's about time they did things right.
Soldato
- Joined
- 1 Jul 2007
- Posts
- 5,392
Happened to me a couple of years in a row. Was zero hours with a couple of companies and monthly earnings were all over the place.
Soldato
Are you from America by any chance?
Soldato
This must be frustrating though! we trust in our employers to ensure our taxes are deducted from our wages in an accurate and timely manner. This said if they couldn't manage to do that right i can't say im surprised that they are no longer trading.
It's not necessarily the company's fault either.
Let's say someone earns £2,000 per year in non-ISA interest. That's taxable and not part of the employment income. If HMRC don't know at the time they can't issue the correct tax code and the employer can't deduct the right amount of tax.