Taxman

[holy vehm]

I have a particular problem with the taxman - he is helping himself to our sweat equity at will and without notice. (To be expected i know)

My wife was placed on a 161T taxcode last month, the same has happened this month. This has resulted in a less than expected equity payment.
A 161T taxcode, from what we can work out is if you earn £100'000 debt notes a year There has been a big mistake made somewhere but we pay the price for that. Some PERSON adds an extra zero and then fucks off. We reckon in the last two months this has cost us around £600 in lost equity, so if left unchallenged it soons mounts up.

No notification was recieved by the taxman and the employer is at a loss, "we just do what the tax man says" is the reply to questions.

We have attempted to engage the taxman on the telephone on many occasions over the last 30 days, these calls are lasting 30 mins before we give up, the number is an 0845 ( a charge is made for these calls i presume) (premium rate possibly).

We are given an opportunity to email but only to update personal details. We can write to them (which is what is going to happen next)

So what route do we go down here?

To me at least, the taxman acts with impunity, takes what he wants, without notice and covers his tracks, he makes little effort to be contacted, he will not answer his phone.
I am treating this as an unlawful theft of a sovereign wealth fund. The fund is made up of the sweat equity invested and in return it is given something of 'value' There is a deductable amount called income tax payable on the total amount given in value. The current employment has in place an agreement with the taxman that this deduction will be made direct to the taxman on behalf of the employee.

Now, should the taxman ask for more, the employer complies at will, without question. The employee is not informed of this until they recieve a pay reciept from the employer. Any contact made by the employee to the taxman to question this increase is met with a deafening silence.

Im thinking at this point that the weak link in this chain is always me/us but a freeman knows better.

I think the weak link is the employer.

some questions:

The wife is on a paye scheme, is there any legal reason why?
In my mind, this is a contract of convenience for the taxman, he will say that its a three way contract between them, the employer and the employee, but who gains through this? only the taxman because there is more paperwork for the employer and for the employee no control over its taxation payments.

I doubt if there is a statute that says an employee HAS to be a PAYE.

What if my wife approached the employer and said that they no longer CONSENT to the PAYE scheme and would like to offer them an alternative sweat equity payment method.
They are to be invoiced every month, 1 week before payday, and to be paid on the same payday as all other staff but she is to be paid by cheque. She is to be responsible for her own taxation affairs.
The employer may be required to INFORM the taxman of this.

Now that seems fair enough to me, but what is the legal/lawful understanding on this, what can or will the employer attempt to hide behind, or the reasons given by the employer as to why the above can not happen?

I assume that she is renegotiating a new contract here, going from a PAYE to a self invoicing. But is this just what the employer will say?
Is it not a case of, from a lawful perspective, that all she is doing is invoicing for sweat equity earnt? She has provided the sweat and they between them have agreed an equity or value, everything else is just contracting with the state, a seperate set of shinanigans altogether.

Is there any law that says when you enter a contract of employment that you also automatically enter a contract with the taxman, i dont think so
Or perhaps its the 'contract of employment' is that where the mistake is made and consent is signed away with out our knowledge. We sign a contract of employment but are whar we doing not also a contract of performance, we perform and recieve value for it, a contract of employment offers certain privaligies or rights, but the vast amount are a legal requirment any way?

More questions than answers at this stage.


If the above does pan out as planned, just watch how long it takes the taxman to get in touch. (im saying 48hrs)

[huntingross]

You could try musashi's approach which from memory puts the employer in a bind, or there was another approach which I believe was from the other side of the pond where the tax money is put into an escrow account until the matter is resolved....the employer is keeping their end of the deal this way and affords the employee the method of resolving the problem.

[treeman]

I intend to engage this little bugger this year and look forward to locking horns with the cuckoo whom demands.

[holy vehm]

You could try musashi's approach which from memory puts the employer in a bind, or there was another approach which I believe was from the other side of the pond where the tax money is put into an escrow account until the matter is resolved....the employer is keeping their end of the deal this way and affords the employee the method of resolving the problem.

I will contact musashi and look for guidance.
The route to self responsibility over taxation affairs was something we were lokking into regards trusts, this issue has may be given us a 'reason' to do it albiet earlier than planned.

I intend to engage this little bugger this year and look forward to locking horns with the cuckoo whom demands.

[pitano1]

hi h.v.

maybe the contract,comes with the `n.i` number.

good luck,in your quest against the bloodsuckers,
pitano1
ps,have you tried your local tax office.

http://search2.hmrc.gov.uk/kbroker/hmrc/locator/locator.jsp?type=1

[holy vehm]

Thanks pitano

I have had a look around on here and there isnt a great deal of info regards this particular aspect of dealings.

I have located the local tax office to me so am going in there on tuesday, that should at least start the ball rolling with regards the high tax band. It should be just a case of highlighting the obvious error and getting the over payment back rather than it being knocked of the tax bill.

The other issue regards the 'contract' in place which allows tax and employer to collude to take the tax direct is rather more ellusive. The general consensus is that what is in effect is a three way contract or a contract between you and the employer, your contract of employment. This is a straight forward contract but where the contract between you, your employer and the tax man is i do not know.

I have seen that there is a 'legal obligation' placed on companies to collect paye. I think word definition is a big part of this as is the relevant statutes.

When you turn 16, you are given a NI number by the tax man.
When you get a job, you are 'OFFERED' a 'CONTRACT' of employment.
The employer has a 'CONTRACT' with the tax man to collect tax on its behalf.

The NI number. Is this given or offered, could you refuse it, what happens when you use it for the first time?
I suspect it is 'OFFERED' and when it is used for the first time you are accepting the terms & cons of the contract with the state. This number then follows you from job to job.
I personally have never seen the T&C of NI number.

There will be a lawful approach to this situation but first i want to sort out the individual contracts to see who is what. The employer will most probably comply with what the taxman says so the challenge will be with them (the taxman)
I will need to 'prove' beyond reasonable doubt that their is no lawful requirement for me to have my tax deducted at source.
It must also be unlawful for any third party to take from my sweat equity without consent - thus there must be a contract in place somewhere between the employee and the tax man.

[AgentProvocateur]

Dear Holy Vehm,

The tax code your wife has been given has nothing to do with the amount of money she earns. A tax code is based upon one's Personal Allowances i.e. the amount of money a person earns before they start to pay tax. For this Tax Year, for somebody under 65, the amount is £7475. When tax codes are created, what happens is, the last number is discarded and replaced by a letter (Usually L or T). Thus 7475 becomes 747L for example. Most people under 65 with one job on a PAYE scheme will have a tax code based on their basic Personal Allowance with no modifications. I.e. it will be 747L.

However, if a person gets benefits, the code - and thus the amount of money a person can earn before they pay taxes is altered. This is what gives rise to different tax codes. For example, assume somebody has a Company Car, valued at say £4000, then this will be deducted from their Personal Allowance to create a new tax code: 7475 - 4000 = 3475. And, 3475 becomes a tax code of 347L. Thus, the individual in this example will start to pay tax (usually at 20% - the basic rate) after earning only £3475, because they will have got the car benefit.

I do not know all the details of your wife's circumstances, so I do not know if there is a 'mistake' in the tax code. But, if this is your wife's only job, I would say that there would have to be some deduction on her record due to some benefit, e.g. a company car, or medical benefits etc. Her employer should know about this, as it is something that would likely be on a P11d form that they would have submitted to HMRC. That said, if your wife has more than one job, the balance of her allowances may be on the other job, and thus the tax code of 161T could be correct. Indeed, the fact that the suffix letter is a T and not an L strongly suggests that she has more than one job - there are subtle reasons for this that I need not get into as they are too convoluted.

On the other points you raised about getting off of PAYE with your employer, I answered a question of this type a while ago on this forum. The link is as follows:

viewtopic.php?f=69&t=6244&start=10

AP


PS; In terms of how much money your wife has lost in terms of an overpayment of tax - assuming she should have been on a 747L code, I calculate the loss to be at a rate of £97.66 per month. Thus 2 months is about £200 so far.

[holy vehm]

Thanks for the considered reply ap,

This is my wifes only job and she gets no benefits. Looking at the hmrc website is suggested T was for those on £100000 pa BUT that said, as with any government info, it is often misleading.

Your reply makes more sense than their website.

She does the same hours most months and the pay is usually the same, but these last two months its been down a few hundred each month, i presumed this was the extra tax

She is going to have to see admin at work, she can mention the form P11d.

If what your understanding of what MAY have happened is correct, i see no reason why it isnt, then i think i may know what has happened. This though just makes things more complicated.

A number of years ago my wife used to work for a company, she left as i started. I started to pick up more delivery rounds and the managment put some of these in the wifes name, this created the situation whereby it appeared she had two jobs. I was told that in order to pay me this is how it would need to be done. In order to get paid i accepted that.

Last year i met with a company manager, who could not understand why the manager had done this, there was no need and so i told him to put everything in my name, which he agreed to.
I cheched subsequent payslips and although it was still going through my wifes name, she had no deductions, so i presumed that as far as the tax man was concerned she no longer worked there. It would appear that presumption was incorrect.

It would appear that she is still very much on the books.

Last year, work tried to reduce my wages and make major changes to my contract, through the wisdom gained on here they were unsuccessful in their attempts, its through this that i spoke with one of the company managers and the above was mentioned. Another meeting is in order. Time to revisit an old thread

We are going down to our local tax office in the morning, see how that pans out.

[AgentProvocateur]

Dear Holy Vehm

I hope this gets to you before you go to your local tax office. The HMRC enquiry centres, from what I understand, usually work on appointments, so just check before you show up. They may just ask you to make an appointment even though you physically show up. Bizarre I know. But just be sure.

On the tax code issue, it seems to me that something big has happened to change your wife's tax code over the past two months. If it is her only job and she is under 65 with no benefits (or expenses) then for this current tax year her tax code should be 747L. In the past tax year it was 647L. The personal allowances have been increased by £1000. This is what makes me suspicious in your case, because you said that she has had the wrong tax code for the past 2 months. Her employer may have received some instruction from HMRC or have changed something themselves at the beginning of this tax year 2011/12 (beginning 6 April 2011) that has caused this change.

It is too much of a coincidence to me that this change seems to have occurred right at the beginning of a new tax year.

Your wife needs to get clarification from HMRC as to ALL of the live employments that she has on her tax record, and all of the benefits/expenses that comprised her tax code of 161T, as just recently issued. They should be able to tell her these things directly.

If her basic PA is £7475 and it has been reduced to £1615 - a reduction of £5860 - to give her the tax code of 161T, then there should be a 'big ticket' item on her deductions column in her last tax code. HMRC people should be able to tell her what this is, and I suspect it will be as a result of her employer listing something on a P11D form that they sent in on her behalf.

On the other hand, it may be as you say - she somehow has listed on her record 2 jobs. In this case, the remainder of her allowances will be on another job which she will have a tax code of 586L, as listed on her record. But, she may not have been mailed a copy of this tax code, and thus not be aware that it exists! This also may be the problem. If so, she needs to tell HMRC exactly when she left her employment, and her P45 details would also be beneficial here.

Sincerely

AP

[holy vehm]

Hi ap, got your post in time, thanks.

We are going to phone them at 9 and see what the score is regards appointments.

I think the problem here is my job and my manager putting some of my wages through in the wifes name, even though this has been reported to the highest position in the company last year.

I went into the managers office this morning and picked up my p60 and there was one there for the wife. I dont understand much on it to be honest.

Both our tax codes are 647L upto 5th april 2011
My wifes tax code at her main job is also 647L.

On my p60 is shows deductions but on the wifes is says NIL but on her main job p60 she has deductions.

Just to reiterate, my wife has never done any aspect of my job, there is no contract ect, she has her own job elsewhere. She only got put on the system because my manager said it was the only way i could be paid my full wage was if some of it went in some one else's name.

It is this that must be creating the illusion she has two jobs and therefore pays extra tax.

But what to do about it?

I suspect the taxman will say that they can do nothing as they are informed by the company that employ me that she works for them and so process the information accordingly, they will say that until the company issue a p45 they cannot do anything to alter the tax code.

I have asked on a number of occasions for the company to do just that but they have not, so what to do there?

This has gone on for years and we must have over paid a fair bit by now, but the wifes p60 showing no tax paid makes me think that we may actually of under paid.