Client underpaid PAYE due to employer not filing P46(car)
Background: I was approached by an employee of a UK plc business because he received a series of P800 calculations dating back to 2003/4 and showing underpaid tax of over £8k. In this time the client has only ever been employed - no sole trader business, rental business or directorships.
In short, the sort of personal who shouldn't ever underpay tax as everything should be dealt with through PAYE.
The issues up to 2007/8 (with a previous employer) led to overpaid tax as a result of certain BIKs being withdrawn. We're not too concerned about the overpayment.
However, in 2008/9 he moved to his current employer. This is when the large underpayments started. We have established with reference to his P60s and P11Ds that the underpayments were due to his company car benefit not being taxed through PAYE. Further investigation has uncovered that his employer failed to send a P46(car) when his company car (and later his fuel card) were issued. As a result HMRC never changed his tax code, resulting in large underpayments of tax.
The 2008/9 underpayment was £2k, 2009/10 underpayment £3.3k. We've just had to file a self assessment return for 2010/11 and the underpayment was £4.5k. In Feb 2011 HMRC made a demand for the underpaid 2008/9 tax which the client wrote a cheque for (incidentally this was not allocated to his account until we queried this last month).
So, in short, my client owes £7.8k for 2009/10 and 2010/11. We've not had the 2011/12 P11D yet but it looks like the correct tax was taken at source (he changed his car early in the tax year and so maybe a P46(car) was filed this time).
We don't dispute that the tax has been underpaid. I doubt we'd get an ESC A19 claim through as the P46(car) seemingly was never sent to HMRC. Having said that. given that HMRC were receiving P14s and P11Ds might there be a case? Assuming we don't have a claim here, the cause of the underpayment lies squarely with the employer in my opinion.
In other people's experience, do employers tend to acknowledge their mistake and sort the unpaid tax themselves or do they go 'oops - sorry about that, but it looks like you're on the hook for a large unpaid tax bill. Yes it's our mistake, but you owe it - hope you can afford it'#
Are there any options to agree with HMRC to collect this through the tax code over two or more years if the employer won't help? An extra £8k in this tax year would seriously hurt the client
- Bookkeeping Rate of Pay 2,662 38
- How to claim relief under a Double Taxation Agreement 284 6
- Tax implication on superannuation 177 3
- What's the Barmiest Reason A Client gave you for going? 2,550 25
- GRNI - Normal Balance 67 2
- Entrepreneurs Relief, and then new company 209 3
- Portuguese Resident having a UK Limited Company 219 8
- Tax Fines - HMRC 813 13
- Taxi Drivers Cost of Sale 99 2
- Is Xero payroll as rubbish as I suspect it is? 1,296 24
- VAT - Check on clients business 907 37
- Second Limited Company 116 1
- Digital tax accounts - what do we expect? 494 10
- Private doctors - Ltd company vs partnership 290 8
- Probate services 368 7
- Annual to At Least Quarterly 496 20
- trading losses allowable? 758 14
- Post AAT? 690 3
- Small amount of untaxed royalties for someone outside SA 143 1
- Treatment of valuation fee for IHT. 194 2