Is Employer responsible for mistake on employee PAYE
I am acting for an individual, employed under PAYE.
The employer has made a mistake calculating PAYE for 08-09 which has just come to light, leaving an underpayment of £1,150. HMRC have written asking my client for the underpayment.
Surely the employer needs to take responsibility for the error, has anyone experienced before? Can you point me to guidance/legislation on this.
Thanks
End result the same?
In most cases the employer will have a right of action against the employee, if the employer stumps up the underpayment, which will end up with the employee being in the same position as had the correct deductions been made in the first instance.
Does the employee wish to remain on civil terms with the employer?
With kind regards
Clint Westwood
Presumably
this has nothing to do with NI and is just the Revenue getting the P14 scratching their heads and then issuing an assessment because they can see that there is an underpayment of tax. Even if this has been caused by an employer operating their PAYE system wrongly (getting the sums wrong or failing to operate or change a tax code), the employee is legally responsible for the tax. He'd have a cause of action against the employer for the interest that might be incurred and the best bet would be for the employer to stump up the tax and the employee cn reimburse him over a year or so.
If it arose by dint of a self-assessment Return submitted showing the underpayment arising out of say, a code that failed to take into account a state pension, then tough titty. No blame attaches to the employer.
If the Revenue had the information and failed to use it with alacrity by altering a coding, then you could probably get them to code it out of 2010/11, by teasing them about their errors in a charming way.
P60
You will be able to see from the P60 what the client's tax code was - and whether the tax deducted reflects this (unless he is on a Week 1/Month 1 code). And you can find out what code was issued by HMRC (your client may even have a copy of his coding notice for the year). If you are absolutely sure it was the employer's fault then asking the employer (nicely) if they would be prepared to pay it and then recover it from the client to help him cope would seem sensible - assuming the employer is in a better position to pay than the employee!
Cathy
this might help
Employer/employee relations v legal position!
It may be the legal positon that the underpayment should, in the first instance, be recovered from the employer but, if I was the employer (and assuming this is an honest mistake - if, indeed, it is the employer's fault at all), I would be grateful to my employee for approaching me direct for a loan to repay the tax rather than bringing my shortcomings in the PAYE department to HMRC's attention!
Cathy
What is the underpayment made up of?
Presumably this is underpaid tax and NI
How did this arise? Did the employer use the wrong tax code?