P60 Final Tax Code 2007-08

P60 Final Tax Code 2007-08

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On a P60 for 2007-08 what does code "BR X" mean? I am aware BR = Basic Rate, but X, cannot find on HMRC website? The employee joined from another employment during the year and the P45 code was 522L. Soon after joining, HMRC issued a code of BR, but no other letters, so on a cumulative basis, not month 1? However, the employer does not appear to have deducted enough BR tax, and a P800 for £550 underpaid tax has just been issued, does ESC A19 apply?

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By anthonymellor
18th Apr 2011 23:57

is it about week 1 basis?

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By glynisbm
19th Apr 2011 08:19

Code BR & week 1/month 1 basis...
X = week 1/month 1 basis (W1/M1) this means that if the code decreased from what it was previously, the W1/M1 basis prevents recalculation of the tax due from 6 April up to the date the amended code operates. Failure to do this would result in all of the tax due from 6 April being collected in one fell swoop.
A W1/M1 basis should always be operated when a code decreases for this very reason; now I know that and you probably know that but would an employer/employee be aware of this mechanism?

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By ACDWebb
19th Apr 2011 11:13

Almost certainly Wk1/Mth1

because to have operated BR cumulative on receipt of the code from HMRC having used 522L from the P45 would have taken the whole £550 now shown underpaid on the P800 in the first month.

Presumably this was not the clients only employment if BR was issued and there is now an underpayment?

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By rota2
19th Apr 2011 12:11

Several sources of PAYE income

To clarify, 1 employment ceased, followed by 1 other employment, 1 occupational pension was paid all year, state pension started in year. HMRC issued the correct codes throughout, but the 2nd employer (part time and irregular) did not deduct enough tax. I think they made an error, possibly because it appears they used Excel.

Where an employer fails to deduct the correct tax indicated by HMRC code I think this should have come to light when HMRC reviewed the end of year returns in April 2008. As we know they are only now issuing P800s. ESC A19 (original I found on another Aweb posting) did not/does not specifically cover these circumstances. However, in my view HMRC should write off the tax as taxpayer could not reasonably have known affairs were not in order. Any views please?  

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By User deleted
19th Apr 2011 13:03

I am just pleased...

... to see "fell swoop" quoted correctly, makes a pleasant change, especially when someone does it off their own bat! 

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By ACDWebb
19th Apr 2011 13:04

I suspect they deducted the right tax

Apparently the client retired and handed the P45 to the new p/t employer who operated 522L.

HMRC got themselves sorted re the various employments and pensions and issued BR to the p/t employer.

The p/t employer realised that if they operated BR on a cumulative basis, having used 522L cumulative already, the client/employee would get hit for £550 tax the following month and so used the Week1/Month1 basis - which I have at the back of my mind as being the correct basis, but cannot firn the relevant reference to this just now

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By rota2
19th Apr 2011 13:22

Is it now irrelevant whether the correct tax was deducted?

I think you may be correct that month 1 basis should have been applied. However, we are where we are and insufficient tax was deducted, precise reason unclear. Question is, does ESC A19 apply where for one reason or another correct tax is not collected at source?

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By ACDWebb
19th Apr 2011 13:45

Fair enough. I merely made the point as you appeared to be tryin

This late in the day ESC A19 might be relevant, if only because we are talking about over three years ago.

Playing devils advocate, with that mix of employments and pensions happening in the year one could say that the client might expect nothing else, but an uneducated (in tax) and presumably unrepresented (at the time) client could easily expect that all was correct, particularly with the change of code to BR and possibly no warning that this was on non cumulative basis and likely to leave an u/p at the end of the year.

So for all those reasons a punt at ESC A19 might well be worthwhile.

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By rota2
19th Apr 2011 14:59

Just wondered how it would affect HMRC's view

Many thanks for the responses. I was not looking to apportion blame, only concerned what HMRC's attitude would be given an apparent absence of guidance for this situation, which must be very common - employer not operating tax code properly, inadvertently, or otherwise. I am thinking carefully how to word the letter to HMRC so that they will agree the ESC.

Taxpayer was not a client until recently, and is a relatively poor friend of my wife. Only charging a small fee to teach her to do her own SA returns in future if required.

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By ACDWebb
19th Apr 2011 15:14

Have a look on the LITRG site
Help with PAYE underpayments in 2007/08

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By rota2
19th Apr 2011 17:05

LITRG

Excellent, this provides some ammunitiobn - although I was aware of LITRG I did not think to look on their website, despite having sat through a lecture on Tax Credits recently given by someone from that group I think. Letter B is the most appropriate and confirms what I found elswhere that HMRC do not consider end of year returns "information".

I understand if HMRC do not agree then there is only one right of appeal for a review by another HMRC officer.

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