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Not been self employed since 05/06 but being fined through PAYE?

Not been self employed since 05/06 but being...


I was working as a car cleaner in 05/06 self employed at the end of 06 I sent the hmrc a letter to inform them I was no longer self employed but now employed, since then I have being paying my tax via PAYE, and moved house. Three days ago I recieved a letter stating that they was going to take what I owed for national insurance contributions through my tax code, I phoned them and they also informed me that in total I owed over £3500?? I never received any self assessment forms in the post, just this letter.

Why would I owe so much, are they fines for not filling my self assements, in contributions what else could they be? Also it says they will start taking this from April I'm worried now as I have a young family and we really struggle as it is aswell having a dmp with step change due to previous credit card debts.

My boss has offered to pay for his accountant to try and resolve this on my behalf. Would this be a good idea or would I be better off on my own.

Will I still have to pay these fines through my tax code?

How do I resolve this?

Sorry for the 21 questions I'm just really panicking about it and annoyed that this was the first time I heard about it as far as I was aware they knew I was no longer self employed, they must know I'm now employed as I am paying tax via PAYE ? Any advice or help would be really appreciated I m not eating or sleeping through panicking about how much tax they will take and how I'm going to make ends meet.


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By mhtax
20th Jan 2014 21:29

Similar situation

My client was in same position.

I rang the self employed National insurance contribution office in Newcastle.

I explained the date self employment had ceased and they cancelled the charges from that date.

I then rang HMRC and asked for a technical call back. The officer I spoke to, after running through the criteria for being in self assessment, cancelled all the unnecessary returns, and therefore the penalty belonging to each of them.

I am still waiting for confirmation that the code has been returned to normal as Debt Management have to authorise that but it should follow through soon

Thanks (1)
20th Jan 2014 21:50

As you have been offered the services of an accountant free of charge you should clearly take full advantage of that.

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By mrme89
20th Jan 2014 22:51

I agree with john, take up your bosses offer. It will be less stressful having a professional looking after the matter.

Looks like you have a good boss too!

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21st Jan 2014 01:09

@ OP (Quokie 123)

First, HMRC have only very recently decided to collect arrears of Class 2 (i.e Self-Employed) National Insurance contributions through the PAYE system, and 2014/15 is the first year for which this will apply.

It seems relatively certain that your letter to HMRC, notifying them that your self-employment had ceased, has either been lost by HMRC or not received by them (95% certain to be the former).  

I surmise also that HMRC have sent out letters for the Class 2 arrears to your old address, hence your not having previously been notified of those arrears.

Whilst you refer to arrears of £3500 being notified to you in the telephone call to HMRC, as the total arrears figure, it seems possible that you may have misunderstood what they said to you.  Class 2 contributions in the last six/seven years would only be a fraction of that figure, say £700 - consequently, possibly the figure of £3500 is the figure which appears in your PAYE Coding notice, as a deduction from your Personal Allowance - the effect of that £3500 deduction would be to increase the PAYE on your employment earnings by £700 (ie £3500 @ the basic tax rate of 20%)( assuming that you are not a 40% taxpayer).

Consequently, if my above possible theory is correct, you should in reality be able to sort this matter yourself, by writing to the HMRC address shown on the Coding Notice, in a letter prominently marked "URGENT - INCORRECT CODING", notifying them of your circumstances as above ( and advising them of the names and addresses of your employers in the last 6 or 7 hears in which you have been employed - this is a precaution, as they should already have details of those employments, but sometimes that information goes astray).

Ask HMRC to issue a correct Code Number immediately, to ensure that the incorrect Code Number is not brought into effect from 6 April 2014.  If for any reason HMRC have not issued the corrected Coding by 6 April 2014, you will find that your net pay is about £13 per week less than it would otherwise be (£58 per month if you are paid monthly) - if HMRC issue a corrected Code Number in say June 2014, then you would normally receive a refund in your July 2014 salary of the approx £174 over-deducted in the first three months of the new tax year.

To reaffirm, my above recommendation is based on the assumption that you misunderstood HMRC in your phone call to them. I suggest that you phone HMRC again, just to double-check that figure of £3500 which you understand is the tax underpaid.  If it transpires that you misunderstood them in the previous phone call, then proceed as above.  However, if HMRC confirm that their records show that you do indeed owe £3500 in tax, then clearly there is something substantially more serious amiss - in that case, certainly the "free" assistance of a competent accountant should be grasped with both hands.

I hope this helps.


Thanks (1)
21st Jan 2014 07:08

Accountant for free

Why would anybody possibly think that would not be a good idea?

Thanks (1)
21st Jan 2014 10:13

Thank you for your replys looking at the letters we have recieved I got one in dec and all it said was brought forward from previous statement £2711.05 please pay it now it was issued by self assessment department but It dosnt actually say what it's for then the one we got last week said £710 will be taking from your PAYE tax code and gave me the new code this was for ni contributions?

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21st Jan 2014 10:44

Take up the offer of the free accountant straight away, they understand what they are doing and are able to speak to better trained call center staff at HMRC.  This could all be resolved in a phone call from the accountant.  At no point will you be better off doing this on your own.

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21st Jan 2014 11:20

@ OP (Quokie 123)

Upon reading your post at 10.44, I think you are confused ( and understandably so).  The possible theory in my last post now appears incorrect.  My "best guess" is now that the National Insurance refers not to Class 2 but to Class 4 NI ( which, if payable, is paid to HMRC along with  Income Tax) ; and hence my reference to Class 2 NI can be disregarded.   

I suspect that the "bottom line" is that the £2711.05 relates to Income Tax (and class 4 NI if applicable) on your previous self-employment, and that demands were sent to your old address.     A slightly less likely reason is that the £2711.05 relates to PAYE underpaid re your employment income in the last few years.  Whatever the reason be, the HMRC figure of the £2711.05 may or may not be correct ( further research will be necessary into the origin of that figure).  

I thus now concur with previous posters that the services of a competent accountant are a must, although it would be inappropriate of course to assume that he can necessarily "vanish away" the £2711.05



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21st Jan 2014 14:06

Thank you I have a meeting with the accountant next week hoping to at least get a little further into why we are being charged etc

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By mhtax
22nd Jan 2014 01:44


I have spoken to HMRC this morning about the amended code for my client mentioned above.The code restriction has been applied for 2013/14 and included £400 penalties and Class 2 National Insurance contribitions totalling over £700. Although both the penalties and Class 2 have been cancelled they are struggling to find out how to cancelk the NI restriction

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By mhtax
22nd Jan 2014 05:45


The amount due on the statement will relate to the late filing penaltys.

Did you file all the returns for your period of self employment?

If you start from 2005/6 with penalties @ £200 per year up to 2010/11, then have penalties of £100, £300 and £900 daily penaltys in September 2013 for 2011/12, the total in October would be £2,500 plus interest. - not far off your statement balance. They will continue to add interest and then daily penaltys periodically so £3,500 including more than £400 Class 2 sounds correct or someone with all those returns outstanding.

Getting the returns cancelled will make all of the penaltys get cancelled too apart from any which relate to your actual self employment.


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