Reply to: Under taxed by my umbrella, now I have a huge tax bill

[cojak]

I think that this is the right time to close this thread. We’ve done as much as we can, it will only get unproductive from here...

[NotAllThere]

Aha. His ltd co failed to notify his other employer - so it's the ltd. co's fault. So it must pay.

[eek]

According to this, if your employer causes you to pay more tax than you should and it's their fault, they have to pay the tax due.

It seems in this case, it isn't CU's fault.

OP should ask HMRC for a payment plan.

I think the important line is this line

However, where the employer/pension provider has not used the correct PAYE code and this causes any tax not to be collected, it remains their responsibility, not yours.

and we've already seen that the only way CU would have known they were not using the correct code was via osmosis as it seems no-one knew that the OPs company had stopped doing payroll.

[SimonMac]

I feel I may have been a little harsh on OP, he's not the first and I doubt he will be the last to be in a position where not knowing their responsibilities has resulted in a large tax bill (although I think this is the first I have seen where a person doesn't know their responsibilities as an employee).

I have said many times, you are paying for advice, and advice only when you engage an accountant, a lawyer, an umbrella company. You are not paying to transfer the liability of that advice to them, unless you pay a hell of a lot of money for the privilege.

[NotAllThere]

According to this, if your employer causes you to pay more tax than you should and it's their fault, they have to pay the tax due.

It seems in this case, it isn't CU's fault.

OP should ask HMRC for a payment plan.

[eek]

Right, so have we finally cleared up the story now?

1) It seems the OP didn't tell contractor umbrella enough information for them to ensure the right tax was paid
2) The OP has made assumptions that turned out not to be the case
3) while contractor umbrella seem to have missed a procedure to double and triple check people on BR tax codes,

4) it isn't Contractor Umbrella's fault as they were following the information given to them.

5) and anyway this is irrelevant as it is up to the OP (as it is with everyone else) to ensure HMRC is told about things and the correct amount of tax is paid.

[WTFH]

how the heck was I responsible for telling them or would I even know what my code should be?? They were taxing in 17/18 at BR because of the overlap, they knew that and once 2017/18 was closed, they were in sole employer position.

How were they to know your tax code? It was your previous company's responsibility to pass on the information, and if they didn't do that, then it would be your responsibility.

Why did you pay yourself out of your own Ltd for 3 months, while also drawing a salary from them? Would it not have made more sense to stop paying from your Ltd, then they would have taken you on at a normal tax code?

HMRC send you out a tax code every year. That is then used by your accountants to calculate what taxes you pay.
Each year your tax limit would change and your accountants would work out your tax return based on that.

If you never advised CU that:
1. You had stopped paying yourself
AND
2. Your tax code was a certain level
Then they would continue on at the initial level until such times as you advised them.

This is one reason why it's important to check your pay slip. Your tax code will be on there. If it's wrong, you need to sort it out.

CU will argue that they have sent you a pay slip every month since you started with them. That pay slip stated your tax code, and you have never questioned it.

[GhostofTarbera]

No, because they told me it wasn’t necessary because of the overlap.

A big boy told me and ran away


Sent from my iPhone using Contractor UK Forum

[eek]

Actually, yes I did, they were fully informed.

Which isn't what you say here in point 3 so could you make your mind up.

I’ll check back in my files later but to my recollection...
Yes
Yes
No - how the heck was I responsible for telling them or would I even know what my code should be?? They were taxing in 17/18 at BR because of the overlap, they knew that and once 2017/18 was closed, they were in sole employer position.

on point 3, did contractor Umbrella know that? You seem to believe they knew that they were your sole employer yet you do not appear to have told them that fact at any point. How was contractor umbrella supposed to discover the fact they were your sole employer (osmosis)?

[BobbyCrane]

So you gave them a P45?

No, because they told me it wasn’t necessary because of the overlap.

[BobbyCrane]

Did you/your company advise CU in writing by April 2018 that you had stopped paying yourself in March 18, and that they were now the sole source of income?
Did you also advise them at that time what your tax code should be?

I’ll check back in my files later but to my recollection...
Yes
Yes
No - how the heck was I responsible for telling them or would I even know what my code should be?? They were taxing in 17/18 at BR because of the overlap, they knew that and once 2017/18 was closed, they were in sole employer position.

[SimonMac]

Actually, yes I did, they were fully informed.

So you gave them a P45?

[WTFH]

I was paid by CU from Jan 18 on BR code.
I was paid by my Ltd co until Mar 18 on 1150L.

CU took the BR code forward and never adjusted for the amount of income passing through their books. That’s my challenge here, that they should have known that and advised me accordingly.

Did you/your company advise CU in writing by April 2018 that you had stopped paying yourself in March 18, and that they were now the sole source of income?
Did you also advise them at that time what your tax code should be?

[BobbyCrane]

AND WE HAVE A WINNER!!!!!!!!!!!!

So you never informed CU that your circumstances had changed after you stopped paying yourself in Mar 18?

Actually, yes I did, they were fully informed.

[SimonMac]

I want to just draw everyone’s attention that we have two separate issues here.

1. BC’s current problem with his current emergency tax code - thread
2. BC’s potential problem with his old legacy tax code - another thread?

I don’t want to overwhelm him with tax problems, can we stick to fixing the first one i this thread?

In fairness one is related to the other, the OP is looking to see who is to blame for his underpayment of tax