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HMRC bungled PAYE for new employee

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HMRC issued an employer with an invalid regulation 80 determination to recover tax due from an employee’s earlier employment in a previous tax year. The employer successfully challenged the tax demanded.

9th Oct 2020
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Sci-Temps Limited is an employment agency and has been an RTI employer since 2014/15.

The relevant facts are as follows:

  • A new employee joined Sci-Temps in November 2015, during the 2015/16 year.
  • In April 2016, HMRC changed that employee’s PAYE code for the 2016/17 year, requiring a tax code of 303T to be operated on a cumulative basis. Sci-Temps implemented that change.
  • In September 2016, following a call with the employee, HMRC changed the employee’s code again from 303T to 1100L.
  • At the end of the September notification from HMRC there was the heading “Previous Pay and Tax Details” which stated “Previous Pay” of £3,144 and “Previous Tax” of £0.
  • These figures related to the employee’s earlier employment, prior to joining Sci-Temps.
  • Sci-Temps changed the employee’s tax code to 1100L, but did not include the previous pay in its deductions working sheet. As a result, the employee underpaid tax of £629 in 2016/17.

HMRC pursues the unpaid tax

HMRC initially sought to collect this sum from the employee; however, she told HMRC that she was not responsible for the underpayment. HMRC then sought to collect the amount from Sci-Temps.

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Replies (8)

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the sea otter
By memyself-eye
09th Oct 2020 17:53

six hundred and twenty nine pounds to go to a FTT and lose.....

No doubt the appeal will cost six thousand two hundred and twenty nine pounds

Madness

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RLI
By lionofludesch
09th Oct 2020 18:25

Have HMRC thought of just doing their job in a competent fashion ?

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By Paul Crowley
09th Oct 2020 19:35

Wasting taxpayers money
Nothing new for HMRC

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By raycad
12th Oct 2020 14:02

HMRC "upheld the determination on statutory review". That's presumably the Alternative Dispute Resolution. Which, sadly, just goes to show that it's rarely possible for an organisation to impartially conduct it's own "internal review". It really didn't need anyone of Anne Redston's vast employment taxes experience to spot the multiple errors on this one - a newly-qualified Tax Officer would surely have been onto it? I can only assume that all concerned must have thought "well, it's only £629, innit?". Shoddy. Very shoddy.

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Replying to raycad:
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By richard thomas
12th Oct 2020 14:31

The "statutory review" is not ADR, it is the review under sections 49B to 49F TMA. (ADR is not "statutory".) A review under s 49B to 49F does not claim to be independent, though it is or should be carried out by an officer not involved in the case.

It should be impartial and judging by the number of decisions that are overturned on review, in many cases it is, but from my judicial experience there are still far too many cases where bad decisions are not overturned on review, this being a prime example.

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Replying to richard thomas:
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By raycad
12th Oct 2020 16:01

I stand corrected, Richard. But, as I think we agree, the case should still never have had to waste Anne Redston's time.

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Replying to raycad:
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By richard thomas
12th Oct 2020 16:08

Anne is one of my judicial heros: I learnt a huge amount from her when, as a member of the Tribunal before becoming a judge, I sat with her. As a judge I too would often spend what might seem a disproportionate amount of time and effort on a case that was "trivial" in terms of money, where HMRC should not have brought the case or where their arguments were hopeless, in the hope that they might learn, and in some cases I am glad to say they did, and changed their policy or guidance.

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Replying to richard thomas:
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By raycad
12th Oct 2020 16:15

Yes, I know quite a few of those! We are in your debt.

Do you fancy a job as a COVID commissioner??

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