100% deduction from pay
I'm not an accountant, so I'd welcome your collective thoughts on this:
My daughter works for a well known multi-national high street clothes retailer as a overnight shelf filler. In the 11-12 tax year she earned just £5500, and with a tax code of 747L, she paid no tax on her fortnightly pay - until the last pay period of the tax year where her employers changed her tax code to BR - creating a tax liability of £1100. Her pay was just £150, so it was all consumed by the tax owing.
In the new tax year they continued with BR, but also carried forward the £950 she still "owed" - so every pay since then has suffered a 100% deduction. They have told her that this will continue until the debt is repayed.
She contacted the tax office, who were semi-helpful in that they told her that they had not issed a BR code, and that the code for this year is 810L. However, they can't do anything else until they receive the P60. They did also say that if they had changed the code, they would spread tax owing over the subsequent year, not deduct it all at the start.
The employers insist that they are operating the payroll correctly, and that it is a HMRC error that they can do nothing about.
My daughter faces a total of 6 or 7 pay periods with 100% deductions, and so is having to borrow money to pay bills etc.
Has anyone come across anthing like this?
Is there any way the employers are correct?
Any suggestions of how to progress this?