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Sam, Accountant
Category: Tax
Satisfied Customers: 14195
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My client has been given a P45 from her employer whose company

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My client has been given a P45 from her employer whose company has gone into administration (P45 issued by administrators). However from August 2015 until she was made redundant (by email) on 5 January 2016 she was only paid a few hundred pounds (instead of her proper remuneration). She was given pay slips which showed deductions but not actually paid. Her P45 now shows that she was paid that money and deductions made for tax, NI and student loan. She is very concerned that she will not be able to get a tax rebate or show that she has not received that money. What can she do?
Hi I think you are saying that the P45 shows what should have been paid - rather than what was? Is that correct? If so then she will need to go back to the administrators with evidence of the pay (and actual deductions) made and ask them to issue an amended P45 If she has no luck here - then ask HMRC to take up matters on her behalf- but there would be very little refund due anyway as refunds are based on unused allowances (so for Feb March and to 05/04/2016 this remin intact - so its just a question of what the position was from Aug 2015 to Jan 2016) Let me know if you require any further assistance.Thanks Sam
Customer: replied 2 years ago.
Yes. All the information has been given to the Administrators and they have evidence from the previous director admitting that the employee has not been paid but they have still insisted on giving her the P45 based on the itemised pay statements issued by the accountants (who also know that the money has not been paid). The employee has bank statements and emails showing the debt but seems unable to get anyone to accept that it exists as far as paperwork is concerned. I am not sure why you think there would be no tax refund due. She is claiming from the Administrator on a net pay basis (as the Tax, NI and student loan payments have been paid to HMRC) but she has been underpaid her wages by thousands of pounds over the period. Why would she not be entitled to a tax refund? She has only just got a job
Hi Thanks fr your response Then you ask HMRC to chase up the administrators to provide accurate information - and also perhaps lodge a complaint with the accountants whom operate the payroll - as they initially allowed the first element of mistake to be made - and should have only processed what was actually paid rather than what was due. She cannot be refunded what has not been paid over - which if you are correct that she has been paid too little, then the deductions would also be smaller than those you claim will create a tax refund.Tax refunds are based (on the whole) on unused tax allowances - which would only cover since Jan 2016 when the employment actually ceased - plus any unused allowances from the time that she was paid less than due (if this was less the monthly entitlement to tax free allowances) in this instance she has either suffered additional deductions (as calculated on the wrong pay - but then has she has not had the wrong pay then has not had the wrong deductions) If, what you are in fact saying is that the deductions were made on the lesser pay she received (so as if the gross pay had been paid with those deductions then implemented against the lesser pay) - then I agree there are monies due back - but this would not be a tax refund - this would be for the end of year Employers team to rectify first and foremost - to then correct with each employee, but this is till down to HMRC to manage ThanksSam
Customer: replied 2 years ago.
Hi Sam - appreciate what you are saying but the Company is now in Administration (as I said) and from the itemised pay statements it would appear that the employee has been paid and the correct deductions made. However she was never actually paid her salary from July to December with the exception of some random payments into her account. Her itemised pay statements show the amount she SHOULD have been paid - not the amount she was paid (she has been underpaid by about £8,500) - having received about £2,200 out of the £10,000+ she should have been paid - these sums are net not gross. Can you advise me as to where we should go from here?
HI That makes no difference it is up to the administrators to wind matters up and deal with any shortfalls due - and ensure the information produced is accurate (and this responsibility lies with the accountants also) as you feel you are getting nowhere then you ask HMRC to assist rectifying the correct position who will have more weight to deal with the administrators - but she cannot have deductions back that have not been made ....... so you are left with1) A true position of pay and actual deductions made - and if tax still proves to have been deducted (thinking specifically for April to July 2015) then a refund will arise on the basis that she earned less than the annual allowances due - OR had used tax allowances OR2) The wrong position of income - which still would recognise that she has unused tax allowances from Feb 2016 until the new job began. I think you seem ? to be getting confused in thinking these hypothetical deductions are due back - or the lost pay is due - and that's not the case, so I cannot see where you believe a huge payment of refund is due to your client ... Thanks Sam
Customer: replied 2 years ago.
Sorry - I think you misunderstood me. It wasn't that I thought that the refund was huge - but as you said potentially because she earned less than her annual allowance. The confusing thing from her point of view is that HMRC have been paid tax, NI and student loan payments from the employee even though she has not been paid any money. Her major concern is that her P45 shows that she has earned far more than she actually has which means that what little income she has had for January 5 - April 6 this year has been taxed and deductions made on that basis including deductions for student loan. Is it best for her to contact her local tax office and go and see them with all her evidence? She has left this all rather late and is, naturally, trying to get every payment that she can of what she is due. The other problem is taking her claim to the Redundancy Payments Fund with a P45 that says she has been paid wages for the dates for which she is claiming! I appreciate it is a bit of a muddle!
Hi Thanks for your response And because the employer (administrators and accountants) have led HMRC to believe that full pay and deductions were made - this is why you have to get HMRC to now rectify this - as the administrators are willing to do so.This then will lead to an amended P45 - so that the correct pay and any tax suffered can be seen in the true position. You may well find that the employer DID NOT pay over HMRC and in fact owe them these alleged deductions - but again until such time that you contact HMRC - that remains to be seen. Any deductions that have been made since (with this new employer) can be refunded IF HMRC are able to amend the correct position - as then her total income may well be less than her tax free annual allwoances, but until you contact HMRC - then nothing will get done.There is no such thing as alocal tax office anymore - she needs to write into HMRC with copies of her bank statements and a copy of her P45 - explaining what has taken place and ask them to investigate - on the basis that tax deductions made since are over and and above what she should owe - and therefore a refund is sought for these. (National Insurance and Student Loan if made since will not be refunded) and any element of student loan shown to have been deducted from the old employer will be added back in to what she owes Again this is not an issue with any claim for Redundancy - once again she shows copies of the bank statements and the P45 AND also the letter to HMRC - they may well for HMRC to rectify matters but they will advsie her accordingly. This is NOT an uncommon problem - and this is easily put right - its just going to take time, but until you advsie HMRC - then they are not in a position to help and she has not left this too late at all ThanksSam
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Customer: replied 2 years ago.
Thank you for the advice. Do you have an address to which she should write, please?