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Where Taxpayers and Advisers Meet

Underpaid tax employer error

Neilkirk
Posts: 1
Joined: Sat Apr 14, 2018 11:47 am

Underpaid tax employer error

Postby Neilkirk » Sat Apr 14, 2018 12:10 pm

Hi all,
I moved into accommodation that I rent from my employer in June 2016. At that time they told me that they could take my rent directly from my wages before tax and that it would be cheaper for me and make no difference to them. In September 2017 they informed me that they had incorrectly been taking my rent from me before tax and would come back to me when they had explored how to rectify the situation. They have now informed me that I owe hmrc £1903 for 2016/17 and £2173 for 2017/18. I accept that this calculation is correct and that if they had been taxing me correctly I would have paid this amount in tax but it seems a little unfair that because of their error I am liable for a large tax bill and that there are no implications to them for there mistake. It's particularly upsetting as my partner and I are expecting our first child in July and can little afford extra expense at this time. I have searched the internet and it seems that in certain circumstances hmrc would place the responsibility to correct this error with the employers but what I have found is a little contradictory and vague so I'm hoping someone here could give me some advice or point me in the direction of someone who could.
Thank you
Neil

SteLacca
Posts: 373
Joined: Fri Aug 07, 2015 2:17 pm

Re: Underpaid tax employer error

Postby SteLacca » Mon Apr 16, 2018 10:50 am

Your employer has been a victim of changes to salary sacrifice to some extent.

Nevertheless, the tax liability is yours (you accept that), and S.7 TMA 1970 places the obligation to notify HMRC that you have a tax liability arising firmly on you.

Unfortunately, it is likely to remain with you, and perhaps the best that you can hope for is to seek a time to pay arrangement with HMRC.

bd6759
Posts: 2803
Joined: Sat Feb 01, 2014 3:26 pm

Re: Underpaid tax employer error

Postby bd6759 » Mon Apr 16, 2018 6:25 pm

Responsibility to pay the correct tax to HMRC is your employer's. That is the backbone of the PAYE system. If it was not thus, then employers would not bother getting it right.

That responsibility can only be passed back to the employee if HMRC agree that the employer made an error in good faith, or the employee was complicit in the arrangement and knew that insufficient tax was being paid. In both these scenarios, HMRC has to explore the fact and tell you of their decision. You have the right of appeal against such a decision.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye90020


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