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Underpaid tax since 2007-2009


nonofabove
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Apologies if I am in the wrong forum. If my question should be posted elsewhere, could you advise?

 

I recently applied for tax refund going back to 2008 for fuel expenses (I have my own car and use it for business travel - I wasn't aware I could claim until this year). I just received a reply detailing underpayments going back to each tax year from 2007 through 2009. It seems the tax office didn't give me the correct coding for each of those years. They were not charging enough for benefits (Medical Insurance, & Fuel). It s a large sum of money, around £5,000 GBP in total.

 

However, they did receive the correct information from each of my P11d's submitted by my employer (all the benefits were correctly detailed, but for some unknown reason, the tax office did not use the correct amounts when calculating my tax).

 

I recieved tax coding for each of the years involved, but I didn't know there was an error. It was only when I realised I should be claiming business miles that all this has come out. My view is they received all the correct info from my employers (via P11d), and I genuinely was not aware they were making errors in my coding.

 

Does anyone have any advise on what I may be able to do? This goes back to 2007, its ridiculous!

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Hello there. I think you're on the right forum, but your question is complex. We don't have any accountants here as far as I know.

 

Did you receive a statement from HMRC each year showing what you were being taxed on and if you have them, do the figures match the ones on your P11D forms? You should have seen a longer calculation that showed how your tax code was arrived at.

 

I'm a bit confused about why they were charging you for fuel [paid by your employer I assume] when you have just claimed for fuel, so it seems your employer wasn't paying for it.

 

Can you tell us on what basis you claimed for business miles please? And do you have a payroll or HR department who could advise you on this? I'm not saying we won't try to help :).

 

My best, HB

Illegitimi non carborundum

 

 

 

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Hi, the statements I received for each year were my PAYE coding notice and it shows my liabilities for tax.

 

The amounts shown on my tax coding notice, under employer benefits (Fuel & Medical insurance), were lower than the amounts I was actually receiving from my employer, but the correct amounts were notified to the tax office from my P11d for each year (I still have the P11ds). So they seem to have been making mistakes for 2 or 3 tax years even though they received the right information from my employer.

 

I didnt notice the difference (to be honest, I never really understood the calculations and just accepted them as they were).

 

The reason they tax me for fuel is that I receive free fuel for personal and business miles. So, my P11d details that amount and I should claim back at £0.40/mile for each business mile I traveled (I didn't know this, that's why I only recently claimed for the previous years - then the tax office appear to have noticed their error and hey presto, a big bill!

 

It annoys me because it seems to be their incompetence that's caused this, I would not knowingly avoid paying my tax and the only reason this has surfaced is because I tried claiming for something I didn't know I was entitled to.

 

I'm hoping that because they had the correct info via my P11d's and the fact that they are looking back to 2007-2009 that I should not be liable for this. (the total amount is £2700 not the £5k I stated earlier). Im not sure what to do about this.

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Hello again. I hope someone else will comment, but I'm afraid they may be able to claim back the tax you didn't pay because your coding was wrong. I know the documents they send are hard to understand, but I fear they will say that the figures were spelled out and you had the chance to check them. In my experience, HMRC never think they are in the wrong. You could have a look around the interweb to see if anyone has won a case when HMRC input the figures wrong.

 

Going back to the business mileage thing and the 40p a mile, I don't have experience of this, but will check it out if I can.

 

The 40p a mile that you want to claim back, is that for using your own car?

 

My best, HB

Illegitimi non carborundum

 

 

 

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Let me add to this with an example.

 

in 2007-2008 tax year. My P11d shows I received benefits of:

£3500 for fuel

£1090 for medical insurance

 

My Tax coding (which is based on the info stated in my P11d), looked like this

My personal allowance £6400

Employer benefits Fuel £1000 (thats the mistake on my coding)

Medical Insurance £400 (thats also the mistake on my coding)

 

Tax free amount £5000 (Tax free amount should have been lower)

 

 

But, this is their mistake, not my or my employers mistake. My mistake was not realising the error they made. Now I have this large bill for tax from 2007

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Hello again. ......

Going back to the business mileage thing and the 40p a mile, I don't have experience of this, but will check it out if I can.

 

The 40p a mile that you want to claim back, is that for using your own car?

 

My best, HB

 

Thanks for your reply and I think you are right that I will be liable to pay it back because, the tax office are never wrong! Please dont worry about the 40pence per mile, thats not in dispute, I can claim for this, I just didnt know this at the time.

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Let me add to this with an example.

 

in 2007-2008 tax year. My P11d shows I received benefits of:

£3500 for fuel

£1090 for medical insurance

 

My Tax coding (which is based on the info stated in my P11d), looked like this

My personal allowance £6400

Employer benefits Fuel £1000 (thats the mistake on my coding)

Medical Insurance £400 (thats also the mistake on my coding)

 

Tax free amount £5000 (Tax free amount should have been lower)

 

 

But, this is their mistake, not my or my employers mistake. My mistake was not realising the error they made. Now I have this large bill for tax from 2007

 

Hello there. I just posted a reply to your first query/ies. When you say tax free amount of £5000, do you mean what was left of your personal allowance of £6400? If that was too high, it would be the reason you didn't pay enough tax, as you say.

 

HB

Illegitimi non carborundum

 

 

 

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Yes thats correct abut the tax free amount (although im using made up figures, it gives you the idea of the mistake made). Looking back to 2007 - 2009 data, I can now understand where the error has come from, my issue, is the length of time taken for them to realise this mistake. They were given the correct information, but are now seeking to claim back the money to 2007/08. I am hoping that because they had all the info they needed and due to the passage of time taken to act upon this, that there may be grounds for me to dispute this - but I dont know what specific action/rules I can use to do this

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Neither do I know if they're out of time, I thought they had 6 or 7 years, hope I'm wrong and someone else will comment. I suspect they will say you had the money when you shouldn't have, so had the benefit of it and now need to repay it.

 

Did you see my question about whose car it is/was? because you still may be able to reclaim mileage allowance.

 

HB

Illegitimi non carborundum

 

 

 

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Did you see my question about whose car it is/was? because you still may be able to reclaim mileage allowance.

 

HB

 

I did see it (I didnt want to swamp you with big long emails). Its my car with fuel card provided by employer. I keep a log of all business miles and claim back from the tax office. I have claimed back to 2008 and the tax office checked back, gave me the money back but turns out I owe them more than they owe me!

 

I thought with the huge mistakes that have been making with tax codes (as reported in the press very recently), that I had grounds to dispute this, due to info being made available to them via my P11ds, that I also was unaware of the error and the fact they failed to act upon it.

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Right, I think I understand, although you're moving into areas I don't have experience of. You're entitled to claim 40p a mile for using your own car, less what the employer paid you, am I right? And that should take into account the fuel that was paid for you? Would you happen to know what the difference per mile was? because that's doing my head in at the moment :???:.

 

I hope that makes sense to you, if not shout.

 

I don't really know about the cases you mention because my days of have a company vehicle are long gone. It's certainly worth a bit more research.

 

HB

Illegitimi non carborundum

 

 

 

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HB, dont get caught up on the fuel tax, my problem is that they are seeking to claim back unpaid tax to 2007/08 when it was their mistake. They had all the info they needed from my P11ds to get the correct coding, I wasnt aware it was wrong. I hope to find out if I can dispute their claim because it was their error and they had all the necessary info and it goes back 3 tax years

 

On the fuel tax: I have my own car, my company pays all my fuel (business & personal). The tax rules now require you to pay tax on all the fuel benefit (regardless if its business or personal) and I can claim back at £0.40/mile for business miles only. Its a fair rule and I have no arguments - £0.40 accounts for wear and tear of my own car and the fact I already paid tax on business miles, when really, I shouldnt be.

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I have done a quick search and I am posting this, others may find it useful:

 

If you have underpaid income tax or capital gains tax for the year 2008/09, and you are satisfied that HMRC have all that time had the information they needed to calculate your tax correctly but have simply not used it until now, you should ask them to consider writing off the underpaid tax – i.e. remitting it and not collecting it from you – under the terms of ‘extra-statutory concession A19’.

A19. Giving up tax where there are Revenue delays in using information

Arrears of income tax or capital gains tax may be given up if they result from the Inland Revenue's failure to make proper and timely use of information supplied by:

· a taxpayer about his or her own income, gains or personal circumstances

· an employer, where the information affects a taxpayer's coding; or

· the Department for Work and Pensions, about a taxpayer's State retirement, disability or widow's pension.

· Tax will normally be given up only where the taxpayer:

· could reasonably have believed that his or her tax affairs were in order, and

· was notified of the arrears more than 12 months after the end of the tax year in which the Inland Revenue received the information indicating that more tax was due, or

· was notified of an over-repayment after the end of the tax year following the year in which the repayment was made.

· In exceptional circumstances arrears of tax notified 12 months or less after the end of the relevant tax year may be given up if the Revenue

· failed more than once to make proper use of the facts they had been given about one source of income

· allowed the arrears to build up over two whole tax years in succession by failing to make proper and timely use of information they had been given.

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Yes, I can see that could work in your favour. Is that what you're going to do?

 

HB

 

Yes, I think it is my only option. I am so angry with them for messing up for such a long period of time and I guess I am annoyed with myself for not noticing. Because they had the P11d's which are all correct and because in each year the tax office sent codings which seemed to account for all the benefits I was receiving, I had no reason to question the tax I was paying (I was still being taxed for benefits, just not the correct amount).

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  • 4 weeks later...

I received a response from HMRC early Nov. Turns out they made a mistake on my calculation for 2007/08 year (in fact they owed me £240), but they continued that the tax owing from 2008/09 & 2009/10 was still due (£1700). They stated that I did not meet the criteria set out under ESC A19 and therefore wouldn't write of the tax, but failed to give a reason why I didn't meet the criteria!!

 

I'm not giving up, I think I do meet the criteria, this was their mistake and they had all the info available to get my tax right, I didn't even know they owed me money from 2007/08. So, I have called them and asked for another officer to review my case - I will keep you posted.

Edited by nonofabove
spelling mistake
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For anyone else reading this, there is a Panorama report on this crazy tax issue (I cant post links, I havent posted enough to this site, so check out the BBC news website and look for 'Are_You_Paying_Too_Much_Tax'). There will be millions more with similar cases to mine. Total incompetence!!

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