State Pension+ Private Pension+ Full Time Work

Guest007

Good morning,

We have a client who was doing ok for last few years with the following income:

1. State pensions
2. Private pension
3. Full Time Work

The client always received the tax codes from the Tax Office. He used the Personal allowances for Private pension then retaining Allowances for Full Time work.

Last month Tax office send him letters including last three years Tax Calculations showing the outstanding TAX payable to HMRC.

The above situation occurred due to not including the State Pension when they calculated tax.
Could you please advise me about the best way of dealing with this? How could tax office made this mistake in the first place when they issued the Tax Code?

Regards,

Guest

http://forums.aat.org.uk/showthread.php?32283-How-does-PAYE-work-for-retired-Person&p=233865#post233865

is this same individual..

deanshepherd

Guest007 wrote: »

Could you please advise me about the best way of dealing with this?

Unless you are going to try some kind of ESC A19 defence (highly unlikely to be upheld in my opinion) then get your client to pay the tax he owes.

How could tax office made this mistake in the first place when they issued the Tax Code?

Because the blind are leading the blind?

Presumably your client would have received a copy of the tax code when first issued and did not check it was correct. Frustrating I know but if I had three sources of income some of it being taxed and some of it not I would probably want to check everything is ok.

Monsoon

I would try A19 - it's being relatively successful at the moment and HMRC ought to know about state pension to code it in.

http://www.guardian.co.uk/money/2010/sep/07/tax-error-letter-templates

http://www.cheapaccounting.co.uk/blog/index.php/tag/tax-fiasco/

payrollpro

HMRC have recently admitted that the communication between themselves and DWP is not as good as it ought to be. Many pensioners do not realise that the state pension allownace is taxable income, mainly because the vast majority do not physically pay tax on it, however I doubt your client would be able to argue that one given the nature of the total income.

I agree with both Dean and Monsoon, use A19 to start, citing the known failure of the two government departments to communicate efficiently and effectively but accept that it is likely to fail on the grounds that taxpayers should check their tax position properly themselves.

Payroll Pro

deanshepherd

I think A19 was very successful with the first round of publicly acknowledged ****-ups by HMRC (2010 perhaps) but in the second wave of announced ****-ups (19 October 2011) HMRC stated they would automatically apply the concession to a de minimus amount (£500 perhaps?) but not in any other cases.

It would be interesting to see how such an application proceeds now.



P.S. I recall the announcement date of 19th October 2011 because Sky News asked me to come in and discuss the issue with Dermot Murnaghan on the sofa. Unfortunately the Dale Farm eviction went ahead and they canned my big TV moment!