Unreported Benefit In Kind

josiejojo13

Hi

I have someone who has been told by their company that they are going to owe alot of tax to HMRC as PAYE coding has been incorrect for many years (about 10 years).

On the first impression I told him that as employers they should be receiving the correct tax code each year and it is their job to work from that to calculate his wages but it turns out nthe company never reported that he has a company car and fuel benefits through them.

He has asked me to try and sort this out but I am nothing t do with the company he works for (his emloyers) but I would like to know who's responsibility it is to correct this and whether or not he can get the company to pay the amount due becasue, in my head, it is them that have made the error, as an employee he has assumed that all his tax has been deducted as it should be.

Hope that makes sense and somebody can advise me of the best approach/action.

Joanne

payrollpro

Joanne,

Second go at this, my first reply just disappeared!

Your friend/client? has a problem. If this was a failure to issue the correct coding then HMRC would be liable. If the employer had failed to operate a code then the employer is liable. In this case however the employer has failed to submit a return and with benefits in kind the emploeyr has two choices - either they can submit the returns late, take the fines for non filing and then leave your friend to pick up the tax or, they can make a voluntary settlement of the fines and the tax liability.

It looks to me like your friends employers have elected to file the returns and leave him/her to face the tax. Not very sporting but perfectly legal.

Your friend needs specialist advice, fast.

Payrollpro

josiejojo13

Many thanks, that's what I thought really.

I think as you say the best thing is for him to get specialist advice which I cannot offer.

It is a friend which is why I was hoping I would be able to help but I think this above my realm of expertise.

Thank you very much in replying and confirming my thoughts. Now to break the news to him.

Joanne

payrollpro

Joanne,

Never a pleasant task.

He may have some room to negotiate so please do not hesitate to contact me again if he feels the need. There will be a number of MIP's on here who, like me, will have dealt with similar situations.

Payrollpro