Hey there, and first I'd like to apologise for making this my first post...
I worked for a government department on a casual basis in my last job, and when I left on 29th February, I collected my last pay and said goodbye to who turned out to be quite a horrible employer, only mitigated by the staff at the place I was working (now closed).
A month went by and I hadn't received my P45, so I didn't really worry and went back to temping, which suits my kind of nomad lifestyle.
For the week I worked at the start of April, I was taxed under the BR code, so out of £220 for the four days, I was subject to around £70 of deductions, which I was expecting. I haven't worked since the start of April due to a family crisis, which is subsiding and I expect to be handed a new assignment next week.
So I was waiting for my P45, but being who they are, they hadn't sent one and I fully expected my agency to hand me a P46 instead.
However, when I checked my bank account at the start of the month, it transpired that they had paid me for the month of April, which was strange, so looking back into my account I found that they had also paid me for March too.
Now, I didn't notice the March payment - my student loan went into the bank at the same time and in total over the space of four days about £7000 worth of transactions went in and out of my account. I'll admit I suck at finances, and I don't really check if I don't have to, so that they paid me came as a shock and I got quite worried about being in hock to them to the tune of a couple of grand.
So I called them and spoke to someone in HR, who took my details and I explained that the other money was gone and I had no reasonable way of paying it back, but I still had the other money and was willing to pay it back. It's lucky I checked, because as my flatmate said, he wouldn't have even checked and that money would be gone if it were his bank.
They told me they'd be in contact, and what happened was that even though the office had closed I was still on the payroll because no one had bothered to remove me. Quite shocked - the payment procedure would involve my line manager - who had left them - approving my flexi and holiday sheets, so this is quite a catastrophic failure on their part in the first place.
The last thing she said to me was that if I didn't pay it back they would hold my P45 to ransom - her exact words. I enquired about tax, which I suddenly realised was going to be an absolute nightmare, and she said I'd have to take it up with HMRC.
So I'm stuck on a few points.
Not paying it back and holding my P45 to ransom? Can they do this? I'm sure I read this isn't legal.
Offering to pay it back in instalments, can they still hold it even though I'm more than willing to negotiate settlement?
A taxation nightmare! I've paid over £600 in tax on those two payments - take it up with HMRC? Does this mean they want the gross amount back and I need to claim the tax from HMRC myself?
I read the contents of the P46, and they're enquiring about work since the start of April, conveniently just after my last assignment finished... I have no idea exactly how much I paid in tax because they didn't send me a payslip, although I assume this should go toward my tax for FY08-09...
So I don't know how to fill out the P46, and I don't really want to disclose too many details to my current employer, the agency, as, well, it's none of their business up until the point where they're going to work out my P46.
Which box am I ticking? Help! If I choose not to pay it back and go work-travelling again, this could mean potential litigation, and obviously I'd rather pay it back for my own moral sense of well being, even though as junior civil servants we got treated like crap.
I don't intend to work for them again.
I'm just generally worried on the above points. If I can gross £300 a week from an assignment, that's a hefty chunk at the basic rate... and I can't afford that, as may well be evident!
Can anyone please offer some sage advice?
Former employer holding P45 to "ransom" 
