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bigduckontax, Accountant
Category: Tax
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I have received notification from HMRC regarding a self

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Hi,
I have received notification from HMRC regarding a self assessment that they deem incorrect. They wish me to pay over £8k and perhaps fine me for issuing an incorrect self assessment.
The facts are:
1) I was employed PAYE for a company who agreed that,in the event that I left, I would receive 3 months notice.
2) This I received with a payment of £18,750.
3) The tax and NI was not stopped at source.
4) I contacted my accountant who agreed that the sum fell under the golden goodbye system whereby if notice is paid under £30k it was tax free and there was no PILON clause in my contract.
5) I duly submitted the self assessment with the figure omitted.
6) When I received the letter from HMRC I contacted the company who have stated that the PILON clause, despite not being in my contract, was deemed to be "custom and practice" and that in their opinion tax should be paid.
7) My argument is that if this was the case why wasn't the tax/NI taken at source and as there was no PILON clause in my contract it should remain tax free?
All help appreciated before I call HMRC.
Cliff

Hello Cliff, I am one of the experts on Just Answer and pleased to be able to help you with your question.

Your termination payment, being under 35K is tax free. You should appeal against HMRC's assessment which is done by simply writing them a letter pointing out this small matter and telling that Department politely to wind their necks in.

I always advise never to telephone HMRC. The personnel who man these lines respond from a very limited number of stock answers and anything out of the ordinary leaves them unable to cope. Always write, then you have a hard copy of what has been discussed and their response.

I do hope that I have been able to show you a way forward in this matter.

Customer: replied 6 months ago.
Is that the definitive answer.?The employer who paid it appears to think differently and will inform HMRC accordingly.

There is an error in my answer, the tax free limit is of course 30K, but in this case its doesn't alter the price of cheese as my old boss was wont to say.

If the employer thinks differently why did they not deduct tax and NI in the first place?

Customer: replied 6 months ago.
That is my question that they are unable to answer. I will write to HMRC and confirm what you have said which falls in line with what I originally thought. Thank you. Cliff

Delighted to have been of assistance, Cliff.

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