PAYE Worker owes Tax- Suggestions

amen

Family member working for the same hotel approx last 25 years.
Weekly pay slips detailing Tax paid etc.

Hotel Namatised, three different companies running the hotel over the last 4 years. Continued to get pay slips detailing Tax paid etc in the hotels name.

Recently changed jobs, submitted P45 to new employer.

Tax had increased so they rang revenue.

Basically they owed Revenue a large sum of unpaid tax ~000s of euro.

Revenue agreed to accept weekly payments as this person does not have a lump sum.

Family member provided samples of payslips showing tax paid but Revenue said still her responsibility to ensure correct tax paid.

Does the family member have any come back against her old employers?

If the family were to provide a lump sum does anyone know if Revenue would accept a lump sum smaller than the full amount ?

Geniass

amen wrote: »

If the family were to provide a lump sum does anyone know if Revenue would accept a lump sum smaller than the full amount ?

Revenue don't get into negotiations on principal sum owed.

It sounds like Revenue are not charging interest.

I doubt there is comeback against the company. They overpaid you, but you benefited from that error.

Best thing to do is enter into a payment schedule. How many years is being allowed to pay it off over? Is it simply the case of reducing her Tax credits over 3 or so years.

Unfortunately she's going to be down the repayment amount, plus the "hit" of paying the correct amount of tax.

2ndcoming

You can pay off any amount you like in one go to reduce the weekly collections going forward, it wouldn't have to be the full amount.

amen

Repayments are over 5 years.

The person was never overpaid.
The tax as stated on their pay slip was correct. The correct tax was collected from their salary but was not passed to Revenue.

They never checked their P60 against their wage slips.

barneystinson

amen wrote: »

Repayments are over 5 years.

The person was never overpaid.
The tax as stated on their pay slip was correct. The correct tax was collected from their salary but was not passed to Revenue.

They never checked their P60 against their wage slips.

Something doesn't compute there.

If they've suffered deduction of the tax they're entitled to the credit for it, unless they were a proprietary director.

hjr

So the tax deducted from the payslips wasn't the same as what was input on the P60?

Does the net figure per the payslips total to the net amount per the P60?

Geniass

amen wrote: »

a large sum of unpaid tax ~000s of euro.

Unpaid by whom, if the tax is paid why is the PAYE taxpayer liable for more tax?

If the company didn't pass over the tax deducted from the employee the company is stealing from Revenue and I don't see how the employee would be liable. They would effectively be asked to pay the tax twice. Somethings not right here.

Tow

Recently changed jobs, submitted P45 to new employer.

Tax had increased so they rang revenue.

This does not make sense. Was the tax deducted on the payslips too low or did NAMA and/or their agents did not pay the tax over to Collector General?

An any event without know all the figures and details, one can not tell if the correct tax was deducted. As their appears to be a large sum involved, you should consult a competent accountant.

Unfortunately you cannot trust in the calculations of front line Revenue staff...

barneystinson

Tow wrote: »

This does not make sense. Was the tax deducted on the payslips too low or did NAMA and/or their agents did not pay the tax over to Collector General?

An any event without know all the figures and details, one can not tell if the correct tax was deducted. As their appears to be a large sum involved, you should consult a competent accountant.

Unfortunately you cannot trust in the calculations of front line Revenue staff...

The staff don't do the calculation, the software does it based on the P35L / P60 details...

prettyrestless

amen wrote: »

The person was never overpaid.
The tax as stated on their pay slip was correct. The correct tax was collected from their salary but was not passed to Revenue.

If this is correct, then the company is liable for this unpaid tax, not the employee.

Tow

barneystinson wrote: »

The staff don't do the calculation, the software does it based on the P35L / P60 details...

The software relies on the operator and suffers from GIGO...

barneystinson

Tow wrote: »

The software relies on the operator and suffers from GIGO...

In general yes, but in this instance, not likely.

P35L data, not input manually, likewise P45 data these days.

Most P21s nowadays are generated automatically via PAYEanytime without an internal operator. And where there is an internal operator they're simply pushing a button, no different than the taxpayer using PAYEanytime.

So while there may be GI and GO, the likelihood is that it's the employer's garbage, not a Revenue employee.

Tow

There is more involved in taxing a person correctly than an employer uploading their P35 correctly to ROS. There are questions over Revenue allocating tax allowances correctly (initially and in their recalculations), how the allowances were allocated to the three companies and what the three companies actually did. It is also not 100% clear if the correct tax was deducted from the employee but not returned or if the employer did not deduct enough tax, and if so why. We do not even know which tax(s) are involved!

nok2008

Looks like maybe wrong tax credits used or maybe something wrong with the software ie USC not calculated correctly.
Loads of companies gone bust in last while owing loads of PAYE and the revenue go after company not person.
If person agrees to repay then effectively paying tax twice.

Tow

nok2008 wrote: »

If person agrees to repay then effectively paying tax twice.

This would be my worry and is why they should get an accountant or someone who know that their talking about to go through all the documentation etc.

Many people would just take what Revenue tells them at face value...

2ndcoming

The P35L/P60 figure is ultimately the one that Revenue have to go off. If the person has provided payslips it seems likely that the incorrect tax was being deducted by the employer causing an underpayment of tax, and thus a liability which is now being collected.

If the person had clear evidence of a discrepancy between the tax deducted on the payslip and the tax declared on the P60 the employer would rightly be in a spot of bother and Revenue would investigate that.

Tbh there are cases like this every day in the PAYE system and paying an accountant to look into it for you is more than likely only going to add on to your costs. It is free to ask Revenue for a letter detailing the cause and reason for the underpayment and how the amount was calculated, you can ask for the opinion of the Inspector of Taxes for your district if you want, again for free.

I'm not knocking accountants but the amount of times I've seen an individual PAYE case truly warrant paying a professional are few in the extreme.

PAYE is not like self-assessment where there are deadlines, penalties, interest etc... the figures are either right or they're not.

barneystinson

Tow wrote: »

There is more involved in taxing a person correctly than an employer uploading their P35 correctly to ROS. There are questions over Revenue allocating tax allowances correctly (initially and in their recalculations), how the allowances were allocated to the three companies and what the three companies actually did. It is also not 100% clear if the correct tax was deducted from the employee but not returned or if the employer did not deduct enough tax, and if so why. We do not even know which tax(s) are involved!

You're just arguing for the sake of it!

All that's relevant is that the total income is correct (not a figure that Revenue input), that the rate bands are correct (they're standard, and only going to be varied by a Revenue employee where there is a reason), and that the correct tax credits are applied (in a case where a person doesn't actually complete a Form 12 and claim credits etc the system will automatically apply the same credits as were issued on the TCC).

I'm not saying Revenue staff don't make mistakes, but based on what we've been told in this particular case the likelihood is a balls up on the employer side.

Will we have a tenner on it?

nok2008

Tow wrote: »

This would be my worry and is why they should get an accountant or someone who know that their talking about to go through all the documentation etc.

Many people would just take what Revenue tells them at face value...

Defo should contact someone about it. They could even get someone in payroll to run the figures through their payroll software r pay an accountant a 100 euro to check calcs and write a letter to the revenue.

Geniass

nok2008 wrote: »

Defo should contact someone about it. They could even get someone in payroll to run the figures through their payroll software r pay an accountant a 100 euro to check calcs and write a letter to the revenue.

http://services.deloitte.ie/tc/

Should give a good indication.

The concern is whether the tax calculated was paid over to revenue.

However, the OP is gone quiet and we'll probably not hear anymore on this.

2ndcoming

If the tax is stated as deducted on the P60 or P45 then from there on it is the employer's liability and the individual in question would never hear of it again.

So, in short, it's 99.9% not that.

nok2008

2ndcoming wrote: »

If the tax is stated as deducted on the P60 or P45 then from there on it is the employer's liability and the individual in question would never hear of it again.

So, in short, it's 99.9% not that.

You are correct in your statement but what happens if the p35 has different figures ie employer fudging payslip and that your p60/p45 payslips is incorrect. Don't know the answer myself though. Who owes who and usually the revenue will go after the easier target. - dodgy employer v obidient taxpayer

Geniass

nok2008 wrote: »

You are correct in your statement but what happens if the p35 has different figures ie employer fudging payslip and that your p60/p45 payslips is incorrect. Don't know the answer myself though. Who owes who and usually the revenue will go after the easier target. - dodgy employer v obidient taxpayer

If a taxpayer has payslips showing they had tax deducted they would not go after the employee. The Revenue aren't interested in getting tax under false pretense.

nok2008

Geniass wrote: »

If a taxpayer has payslips showing they had tax deducted they would not go after the employee. The Revenue aren't interested in getting tax under false pretense.

The revenues only record of what gets paid per employees is a p35 and a p45. A payslip means nothing really and I could do one up on excel.

Geniass

nok2008 wrote: »

A payslip means nothing really and I could do one up on excel.

Try getting a mortgage without one.


Revenue will not chase an employee that genuinely thought tax had been deducted. A payslip from their employer will be such proof. The employer may dispute this, but will have to prove it.

FrStone

nok2008 wrote: »

You are correct in your statement but what happens if the p35 has different figures ie employer fudging payslip and that your p60/p45 payslips is incorrect. Don't know the answer myself though. Who owes who and usually the revenue will go after the easier target. - dodgy employer v obidient taxpayer

If the employee goes back through theeir payslips and the PAYE figure is higher than the P60 figure then the liability is on the employer. The employer could also be done for fraud.

However, we don't know if the P60 matches the payslips, of if the employer never paid over the PAYE etc.

The OP should seek the advice of a Tax Advisor, the Revenue staff on the phone are quite often useless and don't know a whole lot. You should only communicate in Revenue by writing (it will take them a good few weeks to respond, but you have a record of what you send, and their response is reviewed by someone else up the chain).

Only ring them to ask if they have received your correspondence, they have a habit of misplacing letters etc, and they only take a copy of the front page of a document not the whole document... :rolleyes:

allthedoyles

I think the OP needs to come back and give an update , because too many are jumping to conclusions , which may not be correct.

If OP was claiming an allowance he was not entitled to , it would cause an underpayment , for instance home-carer over 4 years would cost him €3,200.

If he got P45 in say , April , and was claiming JSB for 8 months for wife and 6 children , he could end up with underpayment of around €3,200 for one year alone .

barneystinson

FrStone wrote: »

If the employee goes back through theeir payslips and the PAYE figure is higher than the P60 figure then the liability is on the employer. The employer could also be done for fraud.

However, we don't know if the P60 matches the payslips, of if the employer never paid over the PAYE etc.

The OP should seek the advice of a Tax Advisor, the Revenue staff on the phone are quite often useless and don't know a whole lot. You should only communicate in Revenue by writing (it will take them a good few weeks to respond, but you have a record of what you send, and their response is reviewed by someone else up the chain).

Only ring them to ask if they have received your correspondence, they have a habit of misplacing letters etc, and they only take a copy of the front page of a document not the whole document... :rolleyes:

Plenty of people who act as tax advisors are pretty useless too.

People like you who insist on doing everything in writing, are exactly the reason it can take weeks to get a 2-minute thing sorted...

Also, not correct about the last bit... :rolleyes:

FrStone

barneystinson wrote: »

Plenty of people who act as tax advisors are pretty useless too.

People like you who insist on doing everything in writing, are exactly the reason it can take weeks to get a 2-minute thing sorted...

Also, not correct about the last bit... :rolleyes:

After numerous mistakes from the Revenue, it had become form wide policy to put as much as possible writing. It would be so much easier not to have to put everything in wiring.

Well I was told the last bit by a revenue employee on the PAYE helpline as an excuse as to why they didn't have a copy of a document we sent in.

QuinDixie

one option if you receive a bill from revenue regarding underpayment of tax is,
if you can, increase your pension contributions over the period you are paying 'back' Revenue.

barneystinson

QuinDixie wrote: »

one option if you receive a bill from revenue regarding underpayment of tax is,
if you can, increase your pension contributions over the period you are paying 'back' Revenue.

How is that more relevant / useful in that particular circumstance?!

All other things (ie income) being equal, your cash flow is already reduced because you're paying the back tax plus your current tax, and you're suggesting upping pension contribution (which is a further drain on cash flow)..??

QuinDixie

barneystinson wrote: »

How is that more relevant / useful in that particular circumstance?!

All other things (ie income) being equal, your cash flow is already reduced because you're paying the back tax plus your current tax, and you're suggesting upping pension contribution (which is a further drain on cash flow)..??

Pension contributions - you do not pay income tax on these.
Think about it.

barneystinson

QuinDixie wrote: »

Pension contributions - you do not pay income tax on these.
Think about it.

I have, what you're suggesting isn't a solution to this problem.

Simple example with made up numbers. Lets say a person earning 50k, pays tax at a top rate of 50%.
And lets say they decide to pay 5k into a pension. They need 5k. They'll get 50% back in tax relief. Happy days, the pension contribution has cost them 2.5k.

Now lets say the same perso gets hit with an old tax bill, of 3k, so now they're going to have to pay an extra 3k in tax this year. That means they have 3k less CASH available this year. If they want to use pension contributions to negate this, they'll need to put an extra 6k into a pension, to get that 3k of tax relief.

So your solution to avoid a persons net pay falling by 3k is to have their net pay fall by 6k...

I've got some magic (tax deductible) beans to sell, if you're interested...

QuinDixie

barneystinson wrote: »

I have, what you're suggesting isn't a solution to this problem.

Simple example with made up numbers. Lets say a person earning 50k, pays tax at a top rate of 50%.
And lets say they decide to pay 5k into a pension. They need 5k. They'll get 50% back in tax relief. Happy days, the pension contribution has cost them 2.5k.

Now lets say the same perso gets hit with an old tax bill, of 3k, so now they're going to have to pay an extra 3k in tax this year. That means they have 3k less CASH available this year. If they want to use pension contributions to negate this, they'll need to put an extra 6k into a pension, to get that 3k of tax relief.

So your solution to avoid a persons net pay falling by 3k is to have their net pay fall by 6k...

I've got some magic (tax deductible) beans to sell, if you're interested...

First I doubt u understand _ what is 50 % back
Pensions are something people pay to provide for their pension when they retire
So by increasing your pension contribution you lower only your PAYE payments.
Why do you think people make top ups etc etc

FrStone

QuinDixie wrote: »

First I doubt u understand _ what is 50 % back
Pensions are something people pay to provide for their pension when they retire
So by increasing your pension contribution you lower only your PAYE payments.
Why do you think people make top ups etc etc

I'm afraid Barneystinson is right, you are wrong.

If you make a pension contribution of €5,000 euro in a year and you are aged 60, you can reduce your taxable income by 40% of that €5,000. So your taxable income is reduced by €2,000. If you pay tax at thee marginal rate (now 40%), you will reduce your PAYE bill by €800. So for a contribution of €5,000 you have reduced your PAYE liability by €800.

It's a nice incentive, but for the OP it would be easier to pay the tax rather than pay even more into a pension to reduce his liability, if he is stuck for cash.

QuinDixie

FrStone wrote: »

I'm afraid Barneystinson is right, you are wrong.

If you make a pension contribution of €5,000 euro in a year and you are aged 60, you can reduce your taxable income by 40% of that €5,000. So your taxable income is reduced by €2,000. If you pay tax at thee marginal rate (now 40%), you will reduce your PAYE bill by €800. So for a contribution of €5,000 you have reduced your PAYE liability by €800.

It's a nice incentive, but for the OP it would be easier to pay the tax rather than pay even more into a pension to reduce his liability, if he is stuck for cash.

Do the math again. A 5000 euro contribution would lower your PAYE by 2050 but obviously would cost you 5000 euro.
You lower your PAYE bill and provide your pension.
The op was looking for ways to negate the repayments,
This is an option, obviously not for everyone

barneystinson

QuinDixie wrote: »

First I doubt u understand _ what is 50 % back
Pensions are something people pay to provide for their pension when they retire
So by increasing your pension contribution you lower only your PAYE payments.
Why do you think people make top ups etc etc

Flawed logic again. Where did the OP say this person has any interest in pension provision? He specifically said this person doesn't have the means to even repay the tax quickly, let alone say double it to put in a pension.

Their question is about a tax liability.

People should make pension contributions to provide for their pension, and the tax benefit reduces the net cost to them of doing that.

People should not make pension contributions solely to save tax, that's not good investment strategy.

Again, can you explain how it makes sense for someone who would struggle to pay an extra 3k in tax out of their current cash flow, to pay 6k out of that same cash flow in order to save 3k in tax..?

Sell their car maybe, so that they can put 6k in a PRSA and sit on the bus eating a tin of beans for dinner thinking, "nice one, I saved myself 3k in tax!"...

QuinDixie

barneystinson wrote: »

Flawed logic again. Where did the OP say this person has any interest in pension provision? He specifically said this person doesn't have the means to even repay the tax quickly, let alone say double it to put in a pension.

Their question is about a tax liability.

People should make pension contributions to provide for their pension, and the tax benefit reduces the net cost to them of doing that.

People should not make pension contributions solely to save tax, that's not good investment strategy.

Again, can you explain how it makes sense for someone who would struggle to pay an extra 3k in tax out of their current cash flow, to pay 6k out of that same cash flow in order to save 3k in tax..?

Sell their car maybe, so that they can put 6k in a PRSA and sit on the bus eating a tin of beans for dinner thinking, "nice one, I saved myself 3k in tax!"...

read the op again
he says they do not have a lump sum
no mention of strapped for cash

QuinDixie

barneystinson wrote: »

Flawed logic again. Where did the OP say this person has any interest in pension provision? He specifically said this person doesn't have the means to even repay the tax quickly, let alone say double it to put in a pension.

Their question is about a tax liability.

People should make pension contributions to provide for their pension, and the tax benefit reduces the net cost to them of doing that.

People should not make pension contributions solely to save tax, that's not good investment strategy.

Again, can you explain how it makes sense for someone who would struggle to pay an extra 3k in tax out of their current cash flow, to pay 6k out of that same cash flow in order to save 3k in tax..?

Sell their car maybe, so that they can put 6k in a PRSA and sit on the bus eating a tin of beans for dinner thinking, "nice one, I saved myself 3k in tax!"...

read the op again
he says they do not have a lump sum
no mention of strapped for cash
lighten up, in all fairness i work in this field, i am not an amateur

barneystinson

QuinDixie wrote: »

read the op again
he says they do not have a lump sum
no mention of strapped for cash

Clutching at straws Quin Dixie...! You must be one of those people who enjoys picking arguments with people on the Internet...

barneystinson

QuinDixie wrote: »

lighten up, in all fairness i work in this field, i am not an amateur

The tax field? Welcome to the forum so

FrStone

QuinDixie wrote: »

Do the math again. A 5000 euro contribution would lower your PAYE by 2050 but obviously would cost you 5000 euro.
You lower your PAYE bill and provide your pension.
The op was looking for ways to negate the repayments,
This is an option, obviously not for everyone

No it wouldn't.

It only reduces your taxable income, and the whole amount is not allowable, you have to look at the relevant pension limits. My calculation is correct.

CIARAN_BOYLE

FrStone wrote: »

No it wouldn't.

It only reduces your taxable income, and the whole amount is not allowable, you have to look at the relevant pension limits. My calculation is correct.

the 40% relates to the maximum contribution on which relief can be claimed not the % of contribution on which relief can be claimed.