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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I retired from the police in Nov 2012 and took up employment

Customer Question

I retired from the police in Nov 2012 and took up employment as a self employed investigator with the MOD. I decided (and still do) have my salary paid via an Umbrella Company. In addition I am in receipt of a police pension of £23k.
In 3 years I have received from HMRC over 12 different tax codes for my earnings + police pension.
In Feb 2015 it got that fraught that I sought the advice of an accountant who spoke direct to HMRC who informed them of all my salary and police pension.
I thought it was sorted, however when my new salary pay scales were introduced I sought the advice of the same accountant who on examining my wage slips + police pension informed me that HMRC still hadn't got to grips with my correct tax codes.
In short HMRC told me I owed £3k in underpaid tax and it was my fault that I hadn't paid enough tax..
They had apparently calculated my police pension was only £7k per annum, when I asked how they had reached this figure they had no answer this is despite the fact that the police pension fund inform HMRC of how much pension I am in receipt of.
I am now left with huge tax bill for 2016 with apparently no recourse of appeal despite always having been PAYE.
Can you give me advice please?
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
The man at HMRC blamed the miscalculation on shortage of staff and that despite the fact I was PAYE via my Umbrella Company they simply didn't have the time or resources to keep track of my earnings.
To add insult to injury as an ex employee with the police I should appreciate the problems HMRC have at this time.
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
HMRC are past masters at getting this sort of thing wrong. I had several weeks of argument with my tax office over the level of State Pension (SP), remember taxable but paid gross, included in my tax code. It eventually transpired that the officer has assumed that I was on the basic SP totally oblivious of SERPS, State Secondary Pensions etc despite being repeatedly told of the position.
What should happen is that the tax code for your police pension be zero so 20% tax is paid to the whole sum issued and the normal code of 1060 applied to your salary. If this is achieved you will be tax neutral at the year end. You must check the tax code issued on each and every occasion to ensure that it is correct. The problem is bedeviled by the fact that these codes are almost certainly being issued by different tax offices depending upon the ones used by the paying authorities. As I said, constant vigilance is required. HMRC have got my initial tax code wrong these last 20 years and you could have knocked me down with a feather when this year they got it right, well almost!
It is also normal procedure for HMRC to recover underpaid tax through tax codes. An underpayment in 12/13 being recovered in 14/15 as to try to recover it in 13/14 would skew the PAYE process and put you on a month one coding which invariably gets the whole deduction process wrong by the year end. Any underpayment up to 3K may be recovered in this manner.
I doubt if any appeal will be successful, you have received a level of income upon which tax has been underpaid and thus you have a sum owing to HMRC. It is your or your agents responsibility to check tax codes to ensure that they reflect the reality of the situation.
I am so sorry to have to rain on your parade.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3612
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 1 year ago.
I have savings of £2k, would I be able to pay that to HMRC as a lump sum sum to lessen the impact of tax arrears for the tax year 2016?
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.
You could do this and reduce the level of future deductions from salary, but you would have to negotiate this through your overworked tax office so my advice would be to leave it where it is and accept a reduced take home pay for 16/17.
Customer: replied 1 year ago.
Thank you.
Your advice comes as no surprise.
HMRC are a total shambles
If it wasn't so serious it would be funny.
Am going to change my name by deed poll to Mr Google Facebook (lol)
Expert:  bigduckontax replied 1 year ago.
That should delay things by a couple of years while they try to catch up! Just look at the latest Google shambles. Am I talking to Mr Amazon Vodafone by any chance?
Expert:  bigduckontax replied 1 year ago.
Very small point; when I mentioned a tax code of 0 I should have said BR. Doesn't alter the price of cheeses as my old boss was wont to say.

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