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Wrong Tax Code

(13 Posts)
thecalpollady Thu 02-May-13 11:52:36

I'm hoping I'm in the right place to post this! I am still relatively new to payroll and I have a problem.

An employee was given a tax code of 747L when she started in 2011 but the person who entered her details forgot to check her P46 which explains she has another job so was basically on the wrong code!

We have had letters from HMRC saying we owe them £473 even though it has been stated it was a genuine clerical error. The employee is also getting letters saying she owes £400 as well. We haven't had responses to our letters and its impossible to speak to someone about it directly! Anyone who knows when phoning HMRC its a pain and longwinded way to get to the right department.

Can someone explain if we should really pay this or can the tax office find a way to accept this was a genuine mistake?

Thank you for reading if you have got this far.

flowery Thu 02-May-13 12:02:01

Don't understand. Did you pay the correct amount of tax or not? If not, then of course you owe it, and so does the employee. If it was your error then the appropriate thing to do would be to pay the employee's amount for her, either outright on on the basis of an interest-free loan so that she hasn't got to find that sum upfront.

thecalpollady Thu 02-May-13 12:05:48

Yes the correct tax was paid and for this particular financial year and we stated it was an error on our part when we input her tax code.

TallyGrenshall Thu 02-May-13 12:07:07

Even if it was a genuine mistake, if that money is owed then it needs to be paid.

The employee is responsible for the amount outstanding but if it was the companies fault then the nice thing to do would be to pay it for her, or pay it and then the employeee pays it back to the company in installments

TallyGrenshall Thu 02-May-13 12:08:44

X post.

If there is money owing then the correct amount has not been paid.

Do you mean the correct amount for the tax code has been paid? Because even if that is the case, it was the wrong tax code so the tax is then also not correct

flowery Thu 02-May-13 12:23:11

Sorry now I'm not clear. It sounded from your OP that the correct tax had not been paid and you were hoping to not have to pay it because it wasn't deliberate. Now you say the correct tax was paid? If so, you should be able to prove that.

thecalpollady Thu 02-May-13 12:24:33

Now I'm getting confused! confused. To clarify I work for a cleaning company so they don't earn a huge amount. A lot of the pay is below the threshold so the PAYE & NI comes up as zero. I'm stating that we paid the correct tax as a company when we do the P32.

If I'm doing this wrong please let me know as I'm still new on this. Boss isn't helping me much either!

flowery Thu 02-May-13 12:30:00

If she was on the wrong code and as a result not enough tax was deducted, then yes you owe the money. If she was on the correct code then no you don't. You are still not being clear whether you paid the correct amount or not.

thecalpollady Thu 02-May-13 12:47:00

Her total PAYe for that year is 0.00 but her NI was paid for - a very small amount. If I'm understanding correctly you are asking me if the PAYE was paid to HMRC then yes. This is the monthly pay using the P32. If I'm reading this wrong then what do you mean if I paid the correct amount or not?

flowery Thu 02-May-13 12:49:42

So they've already had the £473, or are you now saying this wasn't owing in the first place?

I can't be any clearer. Either she was on the wrong code and the wrong amount was paid and therefore there is a balance owing, or she was in fact on the right code and the right amount was paid, in which case you should be able to prove that.

Are you saying you think HMRC are wrong in saying there is money owing? Because your OP sounds as though you realise they are right but are hoping they will not press you for the money.

thecalpollady Thu 02-May-13 12:59:16

Thanks flowery. Seems like we were in the wrong even if it was a genuine error. We felt we shouldn't have to pay for something that was a mistake but I understand now.

Manchesterhistorygirl Thu 02-May-13 13:02:30

If you make the mistake then you will have to pay what is owed.

This happens to dh because an incorrect code was entered n his behalf by a new employer and hmrc came after him to pay the shortfall. We refused because it wasn't his error and because if statue if limitations we didn't have to pay it. Otherwise we would have gone after the company that made the error.

flowery Thu 02-May-13 13:19:22

Doesn't matter if it was a mistake I'm afraid. If tax is owing then it's owing. Its your responsibility as an employer to ensure the correct tax is paid for your employees, and if you don't, saying it was a mistake isn't going to change that.

Think of it from the point of view of taxpayers. If HMRC weren't going after amounts that weren't paid because of errors, there'd be uproar.

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