Whole world of potential problems. Any advice. Tax/mortgage content.

Viewing 24 posts - 1 through 24 (of 24 total)
  • Whole world of potential problems. Any advice. Tax/mortgage content.
  • olly2097
    Member

    Last week we went to refix our mortgage. I’ve been working for an agency for a best part of a year now. Panicking that we would be refused as I’m not on guaranteed hours.

    We owe 93k.

    My wife’s income alone supporting me and our two children would not even allow us that much due to childcare costs.

    No problem says the Halifax. We can help you. Just give us your last three wage slips.

    Fine.

    We are approved on paper and get a nice 5 years fix and nice rate.

    Yesterday I got a tax demand from HMRC.

    £186 underpaid. Can’t be collected via pay due to low earnings….

    In my mind I’m on 40k a year.

    I log into the government gateway site. Sign up. Passport etc. Turns out my payroll has been declaring I’m earning £300 a week. My wage slips say otherwise. I have tax deductions and NI deductions.

    A. I’m likely to be refused a mortgage. It’s currently in “income checking” The hmrc will say I’m not earning. I will be fraudulently claiming for a mortgage.
    B. I haven’t paid more than £1000 tax in the last year.

    What do I do. I have no idea how to play this. As the little man I don’t want to quickly incriminate myself and open up a world of sh1t but obviously it needs sorting as does my mortgage which will increase loads come next month.

    Any advice where to start????

    Premier Icon wwaswas
    Subscriber

    So your payslips show more tax than the agency has paid to HMRC?

    sounds like you and the HMRC are the victim of a fraud here?

    Rockhopper
    Member

    Some kind of IR35 disguised employment scam going on?

    Ewan
    Member

    Go here: https://www.thesalarycalculator.co.uk/

    See if what you’ve been paying in tax + NI is correct on your payslip. If not, then you probably owe HMRC money, however they’re reasonable esp if you go to them – they’d take a payment plan.

    If you’re saying they’ve been taking tax from the payslip and then not paying it to HMRC then they company is defrauding HRMC, which is probably quite bad for the company.

    olly2097
    Member

    Yeah my wage slips show deductions for Tax and NI. However logging into my account for the HMRC shows I’m only earning £300 a week before deductions. I’m not. I’m paying about £4.50 a week tax and NI but my wage slip is in the hundreds.

    Dont even know where to start.

    olly2097
    Member

    If you’re saying they’ve been taking tax from the payslip and then not paying it to HMRC then they company is defrauding HRMC, which is probably quite bad for the company.

    And me. I’ve been paying someone and then I’ll have to pay again?????

    Premier Icon wwaswas
    Subscriber

    I’ve been paying someone and then I’ll have to pay again?????

    I *suspect* that if you’ve been told you’re paying the tax and have payslips to prove it then you’ll be seen as much of a victim as the hmrc.

    I’d be tempted to talk to HMRC before talking to the agency to understand what’s what. If you go the agency you won;t be able to trust what they say anyway.

    You have a contract? Anythign in there about how tax will work?

    olly2097
    Member

    I have a contract. States nothing about tax avoidance etc.

    Premier Icon martinhutch
    Subscriber

    What is the total disparity between your annual salary and the salary declared by the agency?

    You have primary evidence of earning – payslips which give the correct income and details of tax paid. And secondary evidence – money entering your account weekly.

    You have not been lying about your income to obtain a mortgage.

    However, the mortgage verification scheme does use HMRC records to verify income. Normally works in the other direction ie exaggerating income, but I imagine HMRC only got involved in order to find people who are underpaying.

    You obviously need to clear this up. What period does the 186 demand cover? Seems low if the agency has been seriously misrepresenting your income.

    My advice would be to speak to a tax specialist to get your head around what may have been happening, then speak to the HMRC before you talk to the agency.

    And me. I’ve been paying someone and then I’ll have to pay again?????

    Seems unlikely. The correct deductions appear to have been made (so you’ve paid), but some other salary figure has then been presented to HMRC.

    Don’t Panic!

    gobuchul
    Member

    I *suspect* that if you’ve been told you’re paying the tax and have payslips to prove it then you’ll be seen as much of a victim as the hmrc.

    They may see you as a victim but you will still owe them the tax. It’s a shit state of affairs for you. Even if your employer is committing fraud, I think the debt to the taxman is yours.
    You will have go after your employer for the money, not sure how it all works?

    mikewsmith
    Member

    It could be possible that they are holding onto the tax for as long as possible to get the interest which would be a lot for an agency.

    Appointment with hmrc and the agency Monday morning, you get to pick who first.

    Premier Icon martinhutch
    Subscriber

    So you’re PAYE with a single employer?

    Unless it was an error made in good faith, it’s quite likely the HMRC would expect the employer to sort it.

    The circumstances you describe do not exactly sound like an error made in good faith.

    AFAIK, things are different if your accountant cocks it up or steals your tax payment – you are responsible. But I have a feeling this would be a different situation altogether.

    Ewan
    Member

    Try asking the question here: https://old.reddit.com/r/UKPersonalFinance/ lots of knowledgeable accountants!

    I seem to recall a similar situation where the company had been ripping off the tax man, but the employee acted in good faith – I don’t think the employee had to pay anything (other than the tax they’d already paid). Can’t find the thread.

    Also, if you’re only going by the tax portal, it may be that it is incorrect.

    olly2097
    Member

    Thanks everyone.

    To put it clearly.

    I earn about £40k a year.
    Payroll is PAYE.
    They are telling HMRC I earn £300 a week. So about £16k
    I wasn’t aware of this until I got a tax demand saying it cant be paid back due to low earnings.

    It’s the weekend now. So I get to sit and be anxious.

    Premier Icon martinhutch
    Subscriber

    Just remind yourself that you’ve done nothing wrong. You haven’t lied to anyone. And have a beer.

    Premier Icon pyranha
    Subscriber

    It’s easy to say don’t worry, but I hope you manage it. I would suggest spending some of the weekend getting your records together – as many payslips as you can find, to prove what the company have told you, and bank statements which prove your income.

    As to who owes tax to HMRC, I was taught (years ago) that tax is (almost) always the taxpayer’s responsibility, but recent experience suggests it’s less straightforward.

    We administer the pension scheme of a large plc; we had a problem with missing tax code changes, due to a misunderstanding in our department. We got the bill and had to pay the tax due, without being given authority by HMRC to make deductions from the pensioners. This was for a genuine and admitted error – and we had told them every month what code we were using (in the Real Time reporting system). Your situation sounds like you have a stronger case than our pensioners.

    Are any of the HMRC helplines open at the weekend? I recently called with a query on my tax – the first person I got wasn’t helpful and cut me off instead of transferring my call, but the second seemed to actually enjoy sorting out a refund for me. Try not to be put off if the first person you get isn’t helpful.

    woffle
    Member

    If your tax deductions on your wageslips are appropriate for a 40K salary, but HMRC have a different total earnings (and tax paid), then I’d be speaking to the agency, sharpish. If you’re receiving 40K’s worth of salary (less tax) in your bank account, and have the wage slips and bank statements as proof I’d say you’d be ok re: mortgage.

    The last time I had the misfortune to deal with HMRC directly they were actually ok – people seemed to be alright on the phone with a genuine interest in helping getting things sorted. The problem I have is that for some reason I’m stuck forever dicking about with tax codes and invariably every year I end up with a bill, rather than a rebate.

    But if you’ve effectively understated your salary (and tax), then the likelyhood is that if some monies are owing. HMRC will look to you for that, but I’d be speaking to the agency as to where it’s gone…

    mefty
    Member

    If it is PAYE, the agency will be on the hook for any underpayments, they are required to act as a tax collector on behalf of the government. There is a chance it is simply a data processing error.

    By the sounds of things you have done nothing wrong vis a vis the mortgage lender, you presented payslips to them in good faith.

    If what you have posted is correct, whilst a cause of anxiety and needs to be addressed, you are highly unlikely to face a substantial tax bill.

    Seems all a bit random, PAYE should be collecting tax at your expected earnings rate,
    Do you have a Pension as that will reduce your tax bill.
    Presumably your payroll aren’t keeping upto date records and pay rises / increased earnings should be used to predict / balance tax and employees/ers NI for year end .

    I usually use listentothetaxman website to calc monies
    £40k no pension or other deductions tax a month is £469 / £316 NI
    Total £9,400 a year, net £30.580

    If you aren’t paying anything like these numbers speak to HMRC

    Mortgage application should be fine

    FunkyDunc
    Member

    Is there 2 different questions here?

    PAYE tax is difficult and you are predominantly reliant on the employer getting it right or you as the employee end up paying up to the tax man. That’s how it’s always been, and on a £40k salary you should know roughly how much you should be expecting to pay.

    Mortgage – you are consenting to show them your payslip and bank records, they can’t then contact HMRC and say they have it wrong.

    Get your mortgage sorted ASAP….so long as you can actually afford it at the correct salary deduction

    Andy_Sweet
    Member

    1. Speak to whoever does the payroll for an explanation
    2. If that doesn’t explain it go and pay an accountant for some advice

    It’s possible you’ve overpaid previously and therefore have an enhanced tax code that means you’re paying less tax this year

    mikewsmith
    Member

    I think a few need to re read the OP there is an agency in the middle of all this so not a traditional payroll set up – regardless of that when working for agencies I’m sure everything was declared as paid due to there being some massive issues for them getting it wrong.

    Is it a big agency doing lots of people for the person you are working at? You can always ask somebody else on the books with them where they are at.

    andrewh
    Member

    Hmm.
    Agency
    Payslips not matching earnings.
    .
    Are you sure ‘working for angency’ is the right phrase here? Sorry to be pinickety but might be important. Just wondering if you are a contractor? Agency finds you a job and handles all finances, pays you just enough to maintain NI record. Balance is paid via your Ltd co in dividends and not declared until SA tax return at the end of the year. Income is what you say it is, wages are what they say they are, tax so far is correct, tax return due shortly?
    .
    Had a few contractor clients who were baffled by the whole thing and just let us get on with it, might be the case here? Unusual for the agent to deal with the running of the company too though. Does umbrella company ring any bells OP?
    .

    mefty
    Member

    PAYE tax is difficult and you are predominantly reliant on the employer getting it right or you as the employee end up paying up to the tax man.

    There are two separate points, an employer is required to administer and pay over PAYE, your payslips are evidence of what they have done or purport to have done. If they have not paid it over or mis-adminstered it, that is their problem.

    On the other hand if they administer it correctly and you end up paying too little because your code doesn’t correctly reflect your circumstances, then you will be required to pay the difference if an underpayment.

Viewing 24 posts - 1 through 24 (of 24 total)

You must be logged in to reply to this topic.