No tax deducted from casual employees

JodieR

I've recently started working for a client who employs two part-time casual workers earning approx £90 and £50 a week. It appears that neither of them have ever completed a P46 and they both have other jobs, so should have been on a BR tax code but have never had any tax deducted from their wages. I've only got the records from April 2011 but I imagine this issue does back further than that. Neither of them are in a financial position to 'cough up' the under-paid tax and the employer is a club rather than a commercial company and to be honest they've not got the cash to cover it either. Has anyone ever been in this situtation? Did you notify HMRC? If so how did they suggest the situation's rectified? Can I just start applying the BR tax code from now and ask them to amend the employees tax code for their main jobs to collect the underpaid tax? I think that this will anger the staff though as it's not their fault that they've been overpaid all this time.

groundy

Its up to the club to issue P46. The staff are not at fault here if they notified the club of their other employment and they are certainly not liable for the tax due. The club should certainly complete a P46 as soon as possible and should deduct BR with immediate effect.

Any pay prior to that date will be considered paid net and will be grossed up to calculate the tax due.

jow774

Im not a 100% on this but I thought that if the employees have received a payslip then their details will be registered with HMRC at year end. If they are processing payroll for the employees surely it would have been picked up that they have second jobs on the year end return from their NI Numbers and that they are getting double allowance. Ignorance is no longer a defense for tax, the tax is still due and the employees still havent paid it. I would have thought that the employees will have to pay the back tax in next years tax codes, as it is the employees who pay tax not the employer (unless there is NI to pay of course). I would check with the MIP helpline just in case.

Im confused, is the club/company running payroll or just paying the employees cash?

I would do as Groundy says and get the company to fill in P46's asap, the staff may not be happy but that isnt your fault.

zara5034

Have you had it confirmed that the employees have a tax code on the other jobs? Could it be that they are paying BR on the other jobs?

Another point that I'd like to make is that HMRC are often very far behind with processing year end returns so may not be aware of the situation as yet.

JodieR

The club do have a payroll reference and one full time employee is on a proper tax code and has had payslips and P60 and everything, but the two casual staff who just do a few hours a week are just paid in cash - it's recorded in the cash book so it's not like they're trying to hide it, I just don't think that they realised the procedures for casuals.
Next step is to probably do as Zara says and check to see the situation with their other jobs - I doubt that they're on BR codes in their other jobs but if their combined earnings are within the personal allowance then maybe it won't be so bad.