Tax 'underpayment' help!

[Pippaandpolly]

I received my tax calculation letter in November which stated that I owed several hundred pounds of tax because I had underpaid-I was very surprised as I'm on PAYE, but on closer inspection I realised that the tax calculation had been based on a figure that is over £10k MORE than my salary.

I phoned up and spoke to someone who was equally as confused but eventually discovered that I am in the records as being employed both by my current employer AND by my previous employer-who I actually haven't worked for for 2.5 years. (I haven't had this problem in the interim though.) He assured me it would be sorted and I would receive another letter soon with my new tax calculation on it.

I phoned back in December (I left it about a month) as I'd heard nothing. They apologised and said that they'd written to my previous employer for confirmation that I'm not actually working for them.

I phoned back last week as I still hadn't heard anything and they said they're still waiting to hear from my previous employer. I told them that I'm getting worried as I'm currently on maternity leave and if they start taking out the tax I 'owe' from my pay packet in April, my SMP will be decimated. They assured me this wouldn't happen. I asked if it would be ok for me to phone my previous employer to ask them to look into is ASAP and they said yes.

I phoned my previous employer who said yes, their tax people had sent in the wrong paperwork for the tax year and they were working their way through to rectify the mistake. I asked them to look for the letter from the tax office and respond ASAP as I'm on maternity leave and can't afford to lose SMP to a tax bill that I don't owe. They-quite stiffly-said that it affected lots of people and they'd get to me when they could. They didn't apologise either

Yesterday I had a letter from HMR&C saying that they WILL start taking out what I 'owe' in April and my tax free allowance has been adjusted accordingly-it has been reduced by thousands and thousands. Looking at the figures, I will be taxed on about £200 of the £500 odd which will make a massive difference given how little SMP is.

I don't know what to do. This isn't my fault and I don't owe the money. If they start taking it out we will be in trouble. When I got pregnant we worked out our budget really carefully and this will make things very difficult.

I understand that the tax office need confirmation that I'm not making it up in order to avoid tax and I understand that they think they're owed the money. I understand that my previous employer has made a mistake and that it wasn't done deliberately to screw me over. But we can't afford to pay this money and I'm really worried that they're not going to get it sorted in time. It's been three months already since the whole thing started and it's no closer to a resolution.

Is there anything I can do to speed it up? Apart from camping outside the finance office at my previous employers :(

I think it's also more complicated than it might otherwise be as the £10k 'extra salary' is apparently down as benefits in kind rather than straight pay. Not that I really understand how that makes a difference. I thought PAYE was meant to make things easier!

The onus is on your previous employer, I would say, as they are the source of the mistake. 'Working our way through' sounds very feeble and, frankly, not good enough. Can you get to a face-to-face meeting with them and put a rocket up them to get it fixed more urgently? So what if it affects a lot of other people?.... you have to be utterly selfish about these things or you get pushed to the back of the line. 'Benefits in kind' are things like a company car or private health insurance and they are taxed differently to straight income

For the Tax Office, I would keep on at them daily rather than leaving any time between calls. Keep explaining that you don't work there any more, haven't had any payments, that your previous employer has messed up lots of declarations and that, if they still deduct the money, they will only have to pay you back. I'd even suggest that you ask for a self-assessment tax return for 2011/12 tax year so that you declare the truth and get your money back, even if the supporting paperwork comes along later.

Good luck

Thanks Cogito. I will get back on the phone tomorrow and I think I'll start writing letters of complaint too. It's just so frustrating

Put it in writing to HMRC and make sure you say it will cause severe hardship.

What a shitty situation.

Do you have a P45 from that employer? Perhaps if you could provide that to the tax office, it might help, as hard evidence that you haven't worked there for 2.5 years?

Agree your previous employer should be doing everything they can to put right their stupid error and avoid it having any impact on you. But the tax office should also be helping you, and giving you every assistance to avoid placing you in hardship.