Inland revenue has wrongly calculated my tax code

There are grounds to have tax writen off in some circumstances - but there is more to it than just the official error. You could ask for any error to be taken into account however ultimately it is for you to check the notices of coding. What I cannot understand is how the allowance can be overallowed because normally each allowance / restriction has a specific abbreviation - but then I have not worked on PAYE for some time ( before this allowance was introduced ). If I recall correctly the numerical value could not exceed the highest amount of the allowance.

Ignore the earlier reply. The Children Tax Credit was for 2001/02 and

2002/03 only. For 2002/03 you were due the further amount for the baby. What I think has happened is your employer has carried forward the code in error as the allowance should automatically be withdrawn for 6 April 2003. It used to be if the employer used the wrong code the tax office would ask for an explanation for this. If the employer is reliable then the employee would be liable so as not to penalise the employer - although this may have changed. I think you have to go back to your tax office and confirm the correct code was issued to your employer and take it from there.

Ignore the earlier reply. The Children Tax Credit was for 2001/02 and

2002/03 only. For 2002/03 you were due the further amount for the baby. What I think has happened is your employer has carried forward the code in error as the allowance should automatically be withdrawn for 6 April 2003. It used to be if the employer used the wrong code the tax office would ask for an explanation for this. If the employer is reliable then the employee would be liable so as not to penalise the employer - although this may have changed. I think you have to go back to your tax office and confirm the correct code was issued to your employer and take it from there.

Thanks for your replies. I will have to give them a bell on Monday. I obviously want my tax code altered to the correct one with immediate effect so I am paying the correct tax from now on. I am not one for dodging tax (it's one of life's necessary evils!) but I don't like the idea of effectively have to pay 183 a month extra tax as well as the 90 cut in my take home pay (270 down on my take home) when it is not my fault.

Tim

Ignore the earlier reply. The Children Tax Credit was for 2001/02 and

2002/03 only. For 2002/03 you were due the further amount for the baby. What I think has happened is your employer has carried forward the code in error as the allowance should automatically be withdrawn for 6 April 2003. It used to be if the employer used the wrong code the tax office would ask for an explanation for this. If the employer is reliable then the employee would be liable so as not to penalise the employer - although this may have changed. I think you have to go back to your tax office and confirm the correct code was issued to your employer and take it from there.

Further to this I have found my coding notice for 2003/4 and it says 473L correct but all my payslips from April 2003 say 973L. Perhaps my employer is at fault although I will contact the tax office tomorrow for clarification. If this is the case surely my employer is liable in some way?

Tim

I can only advise how these were dealt with when I was on PAYE - a long time ago so it may have changed. Initially an explanation should be sought from the employer / payroll administration as to why the correct code was not used. I think there are 3 possibilities :

A) It was never received. B) It was received but failed to operate it for various reasons. C) It was received but used it against the wrong person.

If A applies it could mean other codes for other employees were not received because when annual codings take place I think they were sent in batches - although depending on the number issued. If B and C apply then although the employer / payroll is at fault they may not necessarily be liable - I think it was the Collector of Taxes would direct who is liable. However in almost every case it was the employee who has to pay it back if the employer has a good record for operating PAYE. The reason is they would not penalise the employer for making an innocent mistake. It may sound unfair and to be honest I would not think there is much chance of the employer being made liable. As I said the above may have changed - can you post what happens on Monday ?

A) It was never received. B) It was received but failed to operate it for various reasons. C) It was received but used it against the wrong person.

batches - although depending on the number issued. If B and C apply then although the employer / payroll is at fault they may not necessarily be liable - I think it was the Collector of Taxes would direct who is liable. However in almost every case it was the employee who has to pay it back if the employer has a good record for operating PAYE. The reason is they would not penalise the employer for making an innocent mistake. It may sound unfair and to be honest I would not think there is much chance of the employer being made liable.

Yes I will try and post tomorrow as to what has happened as I am sure that I am not the only person in the world to have this happen to them. If the school (which does it's own payroll and not the LEA) is at fault then I will also contact my union (the NUT) to see what sort of legal assistance I can get. If I do have to pay back then:

1. I don't see any reason why I should be charged interest.
2. I should be given a decent length of time to pay.

What annoys me about all this is the fact that I am Mr 'No debt'. I always budget to what my wife's and my take home pay is. The only debt we have is the mortgage and I just hate owing money so the last 24 hours has caused considerable stress.

Tim

I can only advise how these were dealt with when I was on PAYE - a long time ago so it may have changed. Initially an explanation should be sought from the employer / payroll administration as to why the correct code was not used. I think there are 3 possibilities :

A) It was never received. B) It was received but failed to operate it for various reasons. C) It was received but used it against the wrong person.

If A applies it could mean other codes for other employees were not received because when annual codings take place I think they were sent in batches - although depending on the number issued. If B and C apply then although the employer / payroll is at fault they may not necessarily be liable - I think it was the Collector of Taxes would direct who is liable. However in almost every case it was the employee who has to pay it back if the employer has a good record for operating PAYE. The reason is they would not penalise the employer for making an innocent mistake. It may sound unfair and to be honest I would not think there is much chance of the employer being made liable. As I said the above may have changed - can you post what happens on Monday ?

Spoke to the revenue and they have confirmed that the correct tax codes were issued to both myself and my employer. It appears that the school bursar did not apply the code correctly from April 2003 (was 973L instead of 473L). As a result the revenue are not at fault although the school is.

Spoke to my union who advise me to speak to the headteacher in September and get the school to pay the amount in full to the Inland Revenue and then ask me to pay the school back (interest free) over the period of time that the mistake was made. I may also take out a grievance procedure against the school bursar on this matter.

Tim

If the school pays it be careful because there is the danger it may be allocated to their PAYE / NI records. If you are not within Self-Assessment you will not have an individual account to allocate the money to. It may work better if the school pays you instead and tell your tax office you want to pay it in one payment and you can be advised from there -presumably there will have to be liaison with the Collector of Taxes so they can arrange for the payment to be received. Don`t forget you will have the arrears from 6 April 2006 to the date the current code is re-issued to your employer - this will be re-assessed after 5 April 2007. If you want this paid in one payment ask for the code to be cumulative basis but it will collect the full amount in one month.

Thanks for your advice on this and I will bear that in mind. I have now asked for an up to date assessment of what I owe which I need to show to my headteacher/ burser so as to fully let them appreciate the situation that I am in.

Although I do ow realise that IN LAW it is my duty to check my payslip there is also a case of negligence on behalf of the school bursar. for not applying the correct tax code.

Thanks for your advice again though.

Tim

Out of interest I assume that if the full amount is paid off before 5th April 2007 then no interest will be incurred. I am also under the impression that if it is paid over 12 months this is also the case? Is that right?

If it is paid over 36 months then what interest rate do the IR charge?

Tim

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You don't have any rights. I had a similar problem a few years ago and ended up owing a four figure sum in unpaid tax. Pay up plus interest - or else! was their attitude. My accountant tried to mediate but got nowhe re.

If you can do better, good luck to you!

The interest rates are here :

However where it was collected through the code interest was not payable for some reason even if more than one year but this was many years ago - unfortunately I am unable to advise about the interest.

I have been now told that interest is not payable. However, I have been referred to this:

which appears to give me some leverage as the revenue had not informed me for 3 and a half years!!! I will probably write to them today pointing this out to them.

Tim

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I am not sure the concession applies for 3 reasons :

A) It is your employer who has failed to act on information - not Revenue and Customs. B) Is has not taken 3 and a half years. The earliest you could be informed is from April 2004. Individual codes on employees records are checked against the codes operated by employers. By the time the employers send the end of year returns in and this process takes place and it filters through this can take some time - although 2 years appears a long time. C) Could you reasonably believe your affairs were in order ? The response may be some one in a profession should reasonably have checked the payslips. As previously advised I don`t think you have much chance.

Possibly but it's is worth a shot. However, seeing as my school bursar has ignored my coding from the IR on FOUR occasions leads me to conclude that she didn't take 'reasonable care' (an Inland Revenue phrase!) to ensure that I was taxed correctly. I do have a case to have my employer look at paying at least some of the arrears.

And I know one thing for sure once I get the facts about this then every employee in the school will know about her incompetence!

Tim

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