PAYE Underpayment

PAYE Underpayment

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I have a client who is just setting up a business in the current tax year.  He was employed in 2010/11 and not under self assessment.  I reviewed his P60 for 2010/11 and there is a shortfall of tax paid of around £3,500. This was due to a change of tax  code during the year and the new code being on a M1 basis.

I have made the client aware of this shortfall but as he was not under self assessment, should I advise him that HMRC need be notified of this underpayment or do I advise that its the Revenues responsibility to use the information they have and issue a P800 within 12 months of the tax year end ?

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By Chris Smail
21st Oct 2011 13:02

Are you qualified?

If so then your engagement letter will have warned the client of your professional obligations to HMRC. Talk to your ethics helpline.

 

 

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By ACDWebb
21st Oct 2011 13:30

Chances are

he will get picked up in the reconcilliations that are going on at the moment, and ought to be flagged for a review by HMRC.

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By pauld
22nd Oct 2011 11:05

Engagement letter

My engagement letter  states that I am bound by my institutes professional rules and practice guidleines and in particular to correct HMRC errors.  However there has been no error or irrregularity. My client has informed me that he wrote to HMRC to advise them he was on the incorrect PAYE code during 2010/11 hence the change to MI basis and the underpayment. Therefore the relevant information has already been disclosed to HMRC. 

As ACDWebb has said, it is likely they will pick this up during the reconcilations. However my concern was 'Am I obligated to follow this up now to make sure they issue a P800?'  My initial thought was 'No' as all the relavant information has been disclosed and it's the Revenues responsibility to act on the information.  If they do not act in good time and issue a P800 after 5 April 2012 then we might have a case under ESC A19.

Howvever I do need to give the client best advice now so was hoping for a bit of guidance from experience members to ensure I act ethically on this.

 

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