HMRC Tax underpayment due to company car being removed by employer error

[123NeilyB]

Hello CAG,

Apologies if this is the wrong place...

 

Ok. Cutting a very long story short.

Back in January I received a P800 which basically showed and underpayment of £755.

After a lot of back and forth (and holding on the phone, Grrr!) with HMRC and my employer, it turns out the reason why is the employer put on the P11D when the company cars were being swapped over an end date on Car 2 when it should have been left blank to say in effect the company car is still being used… HMRC then did as per the P11D and updated their side to remove the benefit of the car.

However, when the next P11D was sent for the next year, this shows that I did have a company car through that period, and they have then backdated the tax.

Then, just to rub more salt into the wound, I’ve had another 3 months added on top of the £755 initially sent, taking the total underpayment to £1100! Not nice

 

So, I’ve spoken with HMRC who initially said that because it’s an employer error, contact employer. Employer then said that everything is correct, go back to HMRC as P11 is correct. Spoke with HMRC again, who said there were 3(!) P11D’s sent as they corrected 3 things in all, initial P11, Car mess up fixed, then Dental Cover added (they forgot this as well)...

 

HMRC then said that because the employer has made an error, they are liable. Ask them to step in and pay this for you, or lodge an appeal with HMRC to advise that you (I) believe the company has made a mistake.

 

Anyhow I spoke with the employer and tried to put the blame on them but then after the employer doing a lot of checks then speaking with HMRC on the employers helpline, they have been advised by the employers helpline that the “tax liability remains the responsibility of the taxpayer”.

 

So, yes… I understand that is my fault as well for next checking my tax code on wage slip (yes, im naughty, its automated and have to log on so haven’t bothered in yonks – that’s obviously changed now!!), however in my eyes if the employer hadn’t made the mistake in the first place, I wouldn’t be in this situation now!

 

So, this brings me to today… Need to know what to do next… I can think of the following:

1. Push the employer to pay 100% of the underpayment (preferred, obviously!)

2. Ask the employer to pay a proportion of the underpayment, being as it was partly their fault and partly mine for not checking tax code etc.

3. Submit an appeal to HMRC and ask them to investigate – I don’t think this will do anything except delay everything and they will still ask me to pay, however it makes me wonder why they said to me that I could hold the employer liable but then the ‘Employers Hotline’ turned round and said the onus was on me…

4. Take it on the chin and let the underpayment re-payments start in April

 

Or, have I missed something and there is a 5th way?

 

Yep, I agree that really this tax should have and would have been paid anyway, but now because of mistake I have to pay almost double tax this next year, April 2015 to April 2016 which is basically going to blow my savings plan for the next year…

 

Any help, advice you can offer is very gratefully received.

 

Cheers and keep up the fantastic advice that CAG offers

[blondebubbles]

The employer is under no obligation to pay your tax liability on company benefits. If they did this is actually classed as another benefit to you so they'd have to pay more (called grossed up tax) and pay class 1 nic on that amount as it's your personal bill.

 

Eg you owed £1000 in tax and are a 20% tax payer, your employer would need to pay £1572.50 to cover your tax bill. If a 40% tax payer it would be even higher, nearer £2100.

 

 

So that said, I wouldn't appeal to HMRC as the employer helpline is correct. If it was a PAYE issue then that is different because it is the employera legal obligation to deduct the correct tax and nic from your wages as per HMRC rates and the tax code issued.

 

I personally would pay it yourself but it would be up to you whether you discuss it with the employer. Mines would never consider it.

[GrumpyToSayTheLeast]

Had this with my employer. Its purely down to you to keep an eye on and rectify your tax code should you see a problem.

Your employer wont pay your tax for you as it should have been paid by you regardless so you haven't lost out on anything.

Hmrc wont pay your tax for you ad its your tax and they haven't made the mistake.

Unfortunately I see no other option than for you to pay it. If it puts you in difficulty, then contact hmrc who can adjust the tax code to recover it if they haven't already done so.