need help with tax codes and who's responsible for this?

(11 Posts)
twocultures Tue 21-Jun-16 09:35:09

Not sure if this is the correct topic.
I'm currently helping someone who can't speak English with an issue they have after they've left work.
Note: they were employed full time by the company not self employed.
They've received a letter from HMRC asking for a tax return. It also mentions completing a self assessment which as far as my (limited) knowledge goes is only meant to be completed by self employed people?
They're thinking that it's the company's/payrolls responsibility to pay their tax if they were employed full time and the company would get their tax codes from HMRC.
I'm unsure as the company told him it's his responsibility to check his tax code and make sure he doesn't underpay.
I'm unsure what to tell him.
Who's right in this situation ?

PatriciaHolm Tue 21-Jun-16 10:01:13

There are a number of reasons they might be required to fill in a self assessment;

https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

Fundamentally it's their responsibility to make sure their code is correct, whilst it's the employers responsibility to make sure the tax is sent to HMRC if they operate PAYE.

The best course of action would be to call HMRC, though they would need to be in the room with you if they wanted you to act as their representative.

scarlets Tue 21-Jun-16 16:42:11

For which tax year is this? The most recent?

twocultures Tue 21-Jun-16 16:54:24

It's for 2014/15 . This just seems odd to me that the company deducts the tax based on the info they get from HMRC yet it's the employees responsibility to make sure they don't underpay....
I'm probably wrong but I don't know.

LIZS Tue 21-Jun-16 16:57:52

Does he/she have income from more than one source? It may even mean the tax office owes money back?

AnchorDownDeepBreath Tue 21-Jun-16 17:00:38

This just seems odd to me that the company deducts the tax based on the info they get from HMRC yet it's the employees responsibility to make sure they don't underpay....

The company gets the new employee to fill in forms (will have been P45/P46 for 2014 I think) so they can assess what tax code the employee should be on. HMRC write to the employee to say, your tax code is XXX, because of X,Y, Z. Contact us if any of this is wrong. That will include any info about second jobs, personal allowances, uniform rebates, etc.

The employer can't be expected to know enough about the employee to make sure everything is correct. They can be expected to pay tax correctly and as advised, so that's where their responsibility ends.

Do any of the list of reasons that you may need to submit a tax return apply?

ceeveebee Tue 21-Jun-16 17:01:59

Lots of employees have to complete tax returns (high earners, benefits, more than one job, overseas income, interest income might all lead to a tax return being needed)
And employers are sent a tax code by HMRC but they don't see the detail behind it. For example my tax code shows my pension and charity contributions and some underpaid tax from last year but all my employer would see is the bottom line number

prh47bridge Tue 21-Jun-16 17:42:09

This just seems odd to me that the company deducts the tax based on the info they get from HMRC yet it's the employees responsibility to make sure they don't underpay

Although the employee deducts tax there are all kinds of reasons why a taxpayer might have underpaid or overpaid tax. Filling in a tax return gives HMRC the information needed to check whether the employee owes them money or they owe the employee money. It is not just for the self employed.

It is the employee's responsibility to check the tax code is correct. As Ceeveebee says, the employer doesn't get to see how the tax code is calculated. Checking the code is correct needs information only available to the employee - how much are they paying into personal pensions, how much are they gift aiding and so on.

prh47bridge Tue 21-Jun-16 17:45:38

Posted too soon...

So HMRC are absolutely right to ask for a self assessment tax return - fill it in quickly and HMRC do all the calculations so it is no different to any other tax return. And the employer is absolutely right that it is up to the employee to make sure their tax code is correct.

scarlets Tue 21-Jun-16 19:12:47

So, 2014/15. That means that he or she probably underpaid tax in PAYE (for whatever reason) and then ignored two or more letters since the summer of 2015 from HMRC asking for payment. When this happens, HMRC transfers the person into self assessment and starts charging penalties etc. He or she must complete the return now, there's no way around it. I'd also suggest getting 2015/16 investigated in case the problem persisted into that year, as well as checking the current year code.

twocultures Tue 21-Jun-16 20:13:31

Thank you for the replies at least now I know what I can tell them!

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