HMRC put wife onto self employment for tax?

[finaldj]

I've read a couple of posts about HMRC writing to people about underpayment on tax from employers,

 

My wife has been working for Leeds City Council for 15 years she left one job and moved to another (2012) as working in a school so didn't take a break from the her employers.

 

about a year later (2013) she received a letter to say there had been an underpayment of tax for £80. She contacted HMRC explained and they said they would look into this.

 

We never heard anymore. Till 2014 when a 2 tax self assessment forms for 2012/2013 came through the post she wasn't sure what it was and neither did I so just ignored it thinking it was sent in error.

 

Come 2015 3 seperate letters came through the post again it was the self assessment forms one for 2012 and one for 2013 with a reminder for 2014 will need to be paid as well. there was also a £600 fine for late payment in 2012/13.

 

So we just ignored them as wife was working never been self employed. then towards the start of 2015 we got letters come through post to say there was a £900 fine for failure to send our forms back for 2012/13/14.

 

So wife spent the best part for 1hr 30mins on the phone to get through to someone to say that she had called them years ago and it was being looked into. "he wanted the persons name we spoke to" wife was like really? it was 3 years ago and other than these letters coming through we stupidly though was a mistake turns out to be real.

 

The guy on the phone said it looks like when wife called the person had past it onto someone and they had put her down as being self employed.

 

So he said she would now need to register for self employment and then write a letter of appeal to which she did.

 

This was over a year ago and the guy said at the time inbetween you doing this and them looking into it you might still get letters filtering through.

 

So we got the odd letter of reminder and then it stopped. 8 months later OCT 2016 my wife recieved a letter from Fredrickson for the sum of £4397.21

 

All this for £80. So I called them up this was the first letter last week but they wouldn't deal with me all he would tell me was that they are an independant dept compny not part of HMRC's internal collection and that it doesn't matter at this stage if she didn't owe the money or not they have bought the debt off HMRC and we have to pay it now or they'll take our goods to pay it back and suggest wife calls with a payment.

 

So wife tried to call HMRC yesterday and was on hold for 1hr 40 mins they answered the call then it went dead. Now recieved another letter today stating that their next step if we don't pay will be to take enforcement action.

 

Any idea what we should do at this point as wife has always worked so never been self employed I'm not paying 4k out when she has payed her tax through her wages.

[BazzaS]

I've read a couple of posts about HMRC writing to people about underpayment on tax from employers,

 

My wife has been working for Leeds City Council for 15 years she left one job and moved to another (2012) as working in a school so didn't take a break from the her employers.

 

about a year later (2013) she received a letter to say there had been an underpayment of tax for £80. She contacted HMRC explained and they said they would look into this.

 

We never heard anymore. Till 2014 when a 2 tax self assessment forms for 2012/2013 came through the post she wasn't sure what it was and neither did I so just ignored it thinking it was sent in error.

 

Come 2015 3 seperate letters came through the post again it was the self assessment forms one for 2012 and one for 2013 with a reminder for 2014 will need to be paid as well. there was also a £600 fine for late payment in 2012/13.

 

So we just ignored them as wife was working never been self employed. then towards the start of 2015 we got letters come through post to say there was a £900 fine for failure to send our forms back for 2012/13/14.

 

So wife spent the best part for 1hr 30mins on the phone to get through to someone to say that she had called them years ago and it was being looked into. "he wanted the persons name we spoke to" wife was like really? it was 3 years ago and other than these letters coming through we stupidly though was a mistake turns out to be real.

 

The guy on the phone said it looks like when wife called the person had past it onto someone and they had put her down as being self employed.

 

So he said she would now need to register for self employment and then write a letter of appeal to which she did.

 

This was over a year ago and the guy said at the time inbetween you doing this and them looking into it you might still get letters filtering through.

 

So we got the odd letter of reminder and then it stopped. 8 months later OCT 2016 my wife recieved a letter from Fredrickson for the sum of £4397.21

 

All this for £80. So I called them up this was the first letter last week but they wouldn't deal with me all he would tell me was that they are an independant dept compny not part of HMRC's internal collection and that it doesn't matter at this stage if she didn't owe the money or not they have bought the debt off HMRC and we have to pay it now or they'll take our goods to pay it back and suggest wife calls with a payment.

 

So wife tried to call HMRC yesterday and was on hold for 1hr 40 mins they answered the call then it went dead. Now received another letter today stating that their next step if we don't pay will be to take enforcement action.

 

Any idea what we should do at this point as wife has always worked so never been self employed I'm not paying 4k out when she has payed her tax through her wages.

 

1) Stay off the phone unless you can record calls. Deal in writing only, especially with Fred's.

Fred's don't usually buy debts off HMRC, they usually only act "on behalf of HMRC".

Authorised HMRC staff can seize goods ('distraint') for debts, but Fred's and their staff can't (unless they have a CCJ and then only by bailiffs / enforcement offficers with a 'writ of control').

Don't pay Fred's a penny!.

 

2) Where you have gone wrong (sadly), is not returning the self-assessment forms, regardless of if you disagree with the need for them.

It is all well and good to say 'they have been sent in error', but unless / until HMRC agree (and you can prove it!), your wife is still under an obligation to return the forms, and can be liable to a penalty for not returning them.

 

Fill them out and return them ASAP, to prevent further penalties / interest on penalties, and in case HMRC have made a 'determination' on tax due, which the forms may correct to "no tax owed". When HMRC see that there has been no pay recieved not covered by PAYE, they may also stop sending the forms (in combination with you writing in explaining why you think she shouldn't be on self-assessment / considered self-employed, and noting that you had called in to explain, which is why you wish to appeal any penalties).

 

How much of the sum stated as owed is tax and interest on tax? and how much penalties / interest on penalties??.

[BazzaS]

If it later turns out you owe HMRC penalties / interest on penalties, then pay HMRC direct. Don't pay Fred's a penny!.

They'll threaten all sorts on the phone, but it is all hogwash intended to pressurise you. Just say "in writing only' if they call you, and don't call them (Fred's)! unless you can record it, when you then tell them you are recording it (so they'll either decline or not say much so they don't get caught fibbing).

[finaldj]

The original amount was £80

 

They have put £300 charges on per year for each year they have been late sending the tax reforms but which seems to have amounted to 4.3k but not even sure how it has amounted to that.

 

Wife is going to give HMRC another call to try and clear it up. Not sure what proof HMRC want they just need to contact Leeds City Council who can confirm her employment status since 2012

 

From what I can gather from others on here my wife should have appealed online but she doesn't appear to have been offered that or they haven't give the correct info.

 

Appreciate the advice though

 

Just to add if there has been a short fall of tax paid from the employer who is liable my wife or them?

[BazzaS]

The original amount was £80

 

They have put £300 charges on per year for each year they have been late sending the tax reforms but which seems to have amounted to 4.3k but not even sure how it has amounted to that.

 

Wife is going to give HMRC another call to try and clear it up. Not sure what proof HMRC want they just need to contact Leeds City Council who can confirm her employment status since 2012

 

From what I can gather from others on here my wife should have appealed online but she doesn't appear to have been offered that or they haven't give the correct info.

 

Appreciate the advice though

 

Just to add if there has been a short fall of tax paid from the employer who is liable my wife or them?

 

HMRC won't contact the main employer, as that wouldn't exclude your wife having had other employment / other income!

Fill in the returns, thus making the declaration that there is no other income.

 

Even if they "shouldn't have been sent", once sent HMRC can penalise you for not returning them, until HMRC deem they aren't required.

https://www.gov.uk/self-assessment-tax-returns/penalties

 

You had letters regarding penalties in 2014 and 2015 : did you think they were joking?. The penalties can stand for not making a return even if no tax is owed.

 

If you complete the returns showing no extra income,

a) HMRC must either accept this, or claim you had other income, and

b) if your wife was on PAYE how can she have underpaid tax if she had no extra income? If she could have claimed allowances (uniform??) she might even be owed tax back.

 

https://www.gov.uk/tax-relief-for-employees/uniforms-work-clothing-and-tools

[finaldj]

My wife works in a school she doesn't need a uniform she just got a letter one day to say she had underpaid tax by £80. She has never had any other job other than working in a school.

 

The only thing I can think of is that she lost her first job and between losing her job and the appeal I think it took around 3 months they decided to offer her back pay for those 3 months and the £80 I can only assume has come from this. she was out of work for 2 months then started working again in a school for the same employer.

 

The guy on the phone said the person that had dealt with it had transfered the £80 to self assessment but doesn't know why they did that as shouldn't have done so suggested to the wife that she appeals which she did but it seems to have gone ignored..

 

I suppose the only thing to do is contact HMRC and go through it with them again.

[TaxHero]

Unfortunately if HMRC have requested a return it must be complied with. The return must be filled in even if the figures are zeroes.

 

Penalties for not filling in the return can go to £60 per day,

 

The first thing to do is to get all outstanding returns filled in.

 

Any underpaid tax is the responsibility of your wife and not an employer.

 

Once the returns are filled in you can lodge an appeal for the penalties.

 

The penalties cannot be removed until the returns are filed and accepted.

[finaldj]

The old ones have been thrown out the only ones left are ones sent to us in May 2016. Is this going to prove a problem like you only get one P60 or can we just send off the May 2016 one and it will cover the other years?

 

The guy on the phone who we spoke to over a year ago didn't say anything about filling them out and sending them back he said to just appeal which we did and when they realise it was a mistake it should get wiped but this doesn't appeared to have happened and havn't heard anything back from the appeal.

 

Surely they can't hold us to 4.3k for being self employed when it was put on that by accident when it should never have been put their in the first place?

 

Will hopefully have it sorted this week if not perhaps we need to seek some legal advice on it

[stu007]

As they worked for the Local Authority they may still have the records of payroll, so it may be worth contacting HR/Finance Dept of the LA to see if they could get backdated payroll statements for the period concerned.

[BazzaS]

The old ones have been thrown out the only ones left are ones sent to us in May 2016. Is this going to prove a problem like you only get one P60 or can we just send off the May 2016 one and it will cover the other years?

 

The guy on the phone who we spoke to over a year ago didn't say anything about filling them out and sending them back he said to just appeal which we did and when they realise it was a mistake it should get wiped but this doesn't appeared to have happened and havn't heard anything back from the appeal.

 

Surely they can't hold us to 4.3k for being self employed when it was put on that by accident when it should never have been put their in the first place?

 

Will hopefully have it sorted this week if not perhaps we need to seek some legal advice on it

 

No, if they have asked for returns for a number of years, you can't just "do the May 2016 one", and expect it to cover the previous years.

It is a declaration of income for the stated tax year.

As previously advised : unless HMRC tell you the returns are no longer required, they'll need to be completed.

 

Even if no tax is owed, if returns are required and not completed, the penalties for non-completion will keep escalating.

 

If you want to ignore the advice you've had and seek legal advice : go for it. The advice will be the same, and the penalties will continue to increase while you are off seeking legal advice rather than taking the action advised here.

 

Again, you admit to having received notification of penalties in 2014 and 2015. If you ignored these ; Expect HMRC to use this to state you do not have "reasonable excuse". You can engage with them or "stick your head in the sand" further.

[BazzaS]

Additionally, given the first return required is from 2012, have HMRC made a "determination" of tax due (in the absence of a return)?

 

This is their estimate of tax due. After a while this can become "fixed", and the amount legally due (even if no tax would have been due from a correctly completed return!) if the return remains outstanding for long enough. Another reason to get the returns showing no tax due completed, and back to them, instead of looking for loopholes, delaying tactics of "seeking legal advice" or expecting HMRC to suddenly say "oh, it's OK, we've been asking for them for over 3 years, but we've changed our minds"

 

They might change their minds based on your protestations, but haven't to date.

You'd do far better to get the returns in, then persuade them

a) you don't need to be asked for further returns in future

b) that any penalties (& interest on them) be cancelled.

[ericsbrother]

she will need her P60's for the past years to fill in the SA forms. The forms are very easy to do if there is no other income as every box will be blank or 0. Watch out for the NI contribution boxes though, you dont want to double entry that or you will create new problems..

[ericsbrother]

self assessment is not about self-employment. It is a cheap method of sorting out the tax affairs of people who have simple tax affairs. Changing jobs to one of a lower salary will be one of the reasons for getting one

[finaldj]

Thanks for getting back to me. I'm not sticking my head in the sand it's trying to understand. I've said I can't fill in the old notifications as thrown them away the only ones I have is the tax reminder for 2016 that is all.

 

However my wife has called them today. They are sending her a form of her employment history that covers the periods they have asked for and she needs to register online for self assessment as well which a pin code will come through the post. she then has to put an appeal in online with the forms filled in but 2011/2012 will be a bit harder he said as she was claiming JSA for 4 months so will need to contact the benefits office to get some info from them.

 

He said they recieved the appeal letter but because the forms weren't filled out and she wasn't sent her employment history they would have just ignored it which is why it hasn't been stopped. he has suggested a 2nd appeal goes in with the first seperate because he could see the last person she spoke over a year ago hasn't given her all the information that was needed.

 

The guy on the phone said it was put to self assessment because there was no national insurance number to link the £80 to but not sure why they couldn't link it to her name.

 

Fredrickson who have taken the debt on was informed of the error from HMRC but at the moment they aren't bothered it was a pay up or we take it further as they said it was a substantial amount of money.

[BazzaS]

 

Fredrickson who have taken the debt on was informed of the error from HMRC but at the moment they aren't bothered it was a pay up or we take it further as they said it was a substantial amount of money.

 

How are they planning on 'taking it further'? Bearing in mind:

 

Fred's don't usually buy debts off HMRC, they usually only act "on behalf of HMRC".

Authorised HMRC staff can seize goods ('distraint') for debts, but Fred's and their staff can't (unless they have a CCJ and then only by bailiffs / enforcement offficers with a 'writ of control').

Don't pay Fred's a penny!.

 

If it later turns out you owe HMRC penalties / interest on penalties, then pay HMRC direct. Don't pay Fred's a penny!.

They'll threaten all sorts on the phone, but it is all hogwash intended to pressurise you. Just say "in writing only' if they call you, and don't call them (Fred's)! unless you can record it, when you then tell them you are recording it (so they'll either decline or not say much so they don't get caught fibbing).

 

So, it is more bluster from Fred's. Stay off the phone, "in writing only", record the call if you do decide to call them (and let them know!), and if they say they'll send an 'agent' around, "you can do so, and I'll just tell them to get off my property" ; if they then do send someone, you just send them away!.

[finaldj]

Thanks for giving me the info. To make it clear going back to the £80 when my wife first called at the start of all this they said they would look into why this was owed. This never happened of course but she did find out that she couldn't have paid the £80 anyway it was just for information purposes as this would have been paid through her tax/national insurance number but because she has stopped working and claiming JSA it apparently got lost in the system. She then started working again 4 months later for the same employer but the letter they sent at the start of all this said that the £80 was too small amount to attach onto her wage.

 

It was then a year later that these self employment letters started turning up. The guy on the phone apologised over the blunders and misinformation we have been given along the way. But when wife told him she is a full time student now as of September he said well that's a bit of a mix up then as like he said the £80 can only be paid through a national insurance number. so the only thing he suggested as we are doing now is going through the appeals process and put 2 seperate ones in.

[BazzaS]

Thanks for giving me the info. To make it clear going back to the £80 when my wife first called at the start of all this they said they would look into why this was owed. This never happened of course but she did find out that she couldn't have paid the £80 anyway it was just for information purposes as this would have been paid through her tax/national insurance number but because she has stopped working and claiming JSA it apparently got lost in the system. She then started working again 4 months later for the same employer but the letter they sent at the start of all this said that the £80 was too small amount to attach onto her wage.

 

It was then a year later that these self employment letters started turning up. The guy on the phone apologised over the blunders and misinformation we have been given along the way. But when wife told him she is a full time student now as of September he said well that's a bit of a mix up then as like he said the £80 can only be paid through a national insurance number. so the only thing he suggested as we are doing now is going through the appeals process and put 2 seperate ones in.

 

I've previously asked

How much of the sum stated as owed is tax and interest on tax? and how much penalties / interest on penalties??.

 

This is still a key issue.

 

If the majority is penalties / interest on penalties then focusing on the £80 / the tax owed is "rearranging deckchairs on the Titanic".

Penalties [for non-completion of return(s)] can be applied even if no tax turns out to be due.

 

Focus on the returns / penalties / ( and tax, where any 'determination' has been made).