Underpaid company car tax

[backpain]

Hi, I recieved a demand from HMRC for under paid tax from 2008/09 as a result of changing company cars mid way through the tax year. I was subsequently made redundant at the end of the tax year and registered self employed for the next 18 months. In may this year HMRC sent me a demand for the underpaid tax for the second half of the year because the car benefit was higher than the tax code I was on. I've looked into this and found that an ASC A19 may apply because HMRC didn't act on information provided to them i.e. P11D. I have never recieved a copy of a P11D and don't extactly know when HMRC got their copy. All I know is that they did get one because they told me they had it one record over the phone. I've written to them claiming an ASC A19 and they say it doesn't apply because they had no information to act upon. Which seems strage because they seem to know I owe them money. The company I worked for sorted all the company car stuff out and the tax code they sent me seemed ok, but to be honest I wouldn't know how to check if it wasn't correct.

 

How do I get out of this one?

 

I'm currently on a very low income and claim working tax credit, will my credits be increased if I have to pay out extra for underpaid tax?

 

Cheers

Backpain

[honeybee13]

Hello and welcome to CAG.

 

I'll move your thread to the HMRC forum, where you should get some answers. I'll send you a link by PM

 

My best, HB

[backpain]

Thanks

[Gbarbm]

To answer your query regarding an increase in tax credits because of the underpaid tax, I am afraid the answer is no. Tax credits calculations are based on your salary only.

Turning now to the company car issue, it is the responsibility of the tax payer to advise HMRC of any changes to their income regardless of wether they are sent a tax return or not.

When there is a change if company car, the employer is supposed to send a P46(car) to HMRC... Did your employer do this?

The employer also has a statutory obligation to submit form P11D to HMRC by 6 July following the tax year to which it relates and they must give the employee a copy; but from what you say, they didn't do that.

So, by the time HMRC actioned the P11D, chances are you had benefited from a reduced code from 6 April up until the date the PAYE code was changed to reflect the new car details.

This is why it is so important to inform HMRC of changes straightaway in order to mitigate the accrual of underpaid tax.

[backpain]

Anything to add regarding asc a19?

[Gbarbm]

If you feel that HMRC failed to make proper and timely use of the information with which they were supplied, then by all means make an application.

Personally, I think there may be some difficulty in proving this because you don't know when the P11D was submitted to HMRC by your employer, it should have been 6 July.. Was it? You would need to check this with HMRC and your employer, because if the employer submitted it after the filing date, HMRC would not be able to have processed it until then.

Your employer should have submitted a P46(car) when you took delivery of the new car... Did they? You'll need to check that with them.

[backpain]

Sounds like the my previous employer or HMRC have sat on their arses. I don't see how they pin it on me. As an employee its the company that sort all the tax stuff out with HMRC and I get sent a tax which I'm expected to check and some how know whether its right or not. It's rediculous, how do I know what HMRC are basing their calculations on. Will they send me copies of the P46(car) and P11D and tell when they recieved it?

[Gbarbm]

Another aspect of ESC (extra statutory concession) A19, is that as well as HMRC failing to make proper and timely use of the information supplied, you would need to have a belief that your tax affairs were in order.

I take it the new car was a different (better and more expensive) one than the original car.

HMRC would then argue that you should have expected a tax code change to account for that (just playing devils advocate here)

[backpain]

Well actual no, I went from an Audi to a Nissan similar value same engine. I was driving 1500 miles a week chasing sales and making nothing, the last thing on my mind was whether the wages department were doing their job right!!!!! And to be honest I don't agree with taxing people for company cars in principle. Especially when you can't accually do you job without the car and have no time or money to use the car as what the claim to be a benefit. I don't think they did make timely use of the information because they obviously have the information but claim they have no information to act on. The opening statement of their letter is a complete and utter fabrication because I spoke to someone and they said,,,,,oh yes we have your P11D.

[Gbarbm]

The benefit arises as the car is available for private use (home to office travel, weekends, evenings etc) so the chargeable benefit relates to private and not business use.

To satisfy an application for ESC a19, you have to show that;

1) HMRC did not make proper and timely use of the information supplied (P11D and P46 (car)

2) you had a reasonable belief that your tax affairs were in order