HELP - INLAND REVENUE............
Discussion
OK, some honest help needed please.
The IR look like they are questioning a lump sum payment I got tax free a few years back when I left my old employer. I have a letter from the emploeyr saying that it was paid to me tax free, but IR are saying that's not right.
They are saying I have to pay tax at 40% on it.
This is not good news as I don't have the money.
Looks like I owe £8k plus interest.
Are they going to allow me time pay, and how long will they allow me. Money should have been paid in 2001 they say.
Frankly I'm sh1tting myself. I can pay it off at say £300 a month but am really stressing about whether they will just refuse to let me pay it off at a reasonable monthly amount.
Any views on whether they are open to sensible offers to pay it off?
Genuine thanks in advance.
>>> Edited by 330Clubsport on Tuesday 24th August 19:50
>>> Edited by 330Clubsport on Tuesday 24th August 19:55
Before you consider paying it off, are you 110% sure that you owe the money?
Certain elements of redundancy pay are tax-free (within certain limits - up to £30k) IIRC - I'll just have a look on t'web.
If they have got you bang to rights, then my understanding is that they will probably be flexible in terms of taking payment at a rate you can make, but I suspect they will continue to charge interest...
>> Edited by UpTheIron on Tuesday 24th August 20:03
Certain elements of redundancy pay are tax-free (within certain limits - up to £30k) IIRC - I'll just have a look on t'web.
If they have got you bang to rights, then my understanding is that they will probably be flexible in terms of taking payment at a rate you can make, but I suspect they will continue to charge interest...
>> Edited by UpTheIron on Tuesday 24th August 20:03
If it helps, they will almost always be willing to take it in instalments if you do not have the money available to pay it all at once.
There is little merit in them pursuing expensive court action to force you to sell something.
They will keep charging interest on it though unfortunately.
I would speak to a proper tax accountant (like my mum) before you actually start paying it though. Its not unusual for the Revenue to get things completely wrong and continue to insist they are right for months or longer before backing down
There is little merit in them pursuing expensive court action to force you to sell something.
They will keep charging interest on it though unfortunately.
I would speak to a proper tax accountant (like my mum) before you actually start paying it though. Its not unusual for the Revenue to get things completely wrong and continue to insist they are right for months or longer before backing down
330Clubsport said:
......The IR look like they are questioning a lump sum payment I got tax free a few years back when I left my old employer. I have a letter from the emploeyr saying that it was paid to me tax free, but IR are saying that's not right.
Just a thought, as you clearly want a quick answer to this...
It may be worth briefly outlining the circumstances that lead up the to payment, was it a bonus, severance, redundancy etc. I'm sure this will help you get the right advice in a shorter space of time.
Enjoy that beer!
PS: I ended up owing the IR after a short spell of self-employment where I was given the wrong tax advice. The IR let me pay the amount due to them by changing my PAYE code for the next 2 (could've been 3) years.
see an accountant or a specialist tax solicitor. The first thing to work out is whether the payment should be subject to tax at all. Secondly, if it is subject to tax, you need to get advice on your agreement in relation to the payment with your former emplployer to see whether they undertook to pay on your behalf. That would not absolve you from liability to the IRm, but would give you the right to recover the amount from your former employer.
Redundancy payemnts are taxed just like any normal salary.
The basic rules surrounding payments to employees is that any amounts paid to an employee as earnings related to the work they do or did are subject to tax (PAYE) and NI. However, if a payment is made by an employer as an - "ex-gratia" payment (i.e - out of the goodness of his heart) and is not linked to the services performed by the employee, then that payment may escape tax as long as it does not exceed £30,000. The difficult thing may be proving that your payment fell into an "ex-gratia" category. A letter from your employer, at the time the payment was made to you, setting out the terms under which the payment was made and clearly stating that it was "ex-gratia" would have been very useful. You may want to contact your ex-employer to seek clarification on what was intended if a letter was not generated at the time the payment was made to you.
The basic rules surrounding payments to employees is that any amounts paid to an employee as earnings related to the work they do or did are subject to tax (PAYE) and NI. However, if a payment is made by an employer as an - "ex-gratia" payment (i.e - out of the goodness of his heart) and is not linked to the services performed by the employee, then that payment may escape tax as long as it does not exceed £30,000. The difficult thing may be proving that your payment fell into an "ex-gratia" category. A letter from your employer, at the time the payment was made to you, setting out the terms under which the payment was made and clearly stating that it was "ex-gratia" would have been very useful. You may want to contact your ex-employer to seek clarification on what was intended if a letter was not generated at the time the payment was made to you.
Useful link: www.inlandrevenue.gov.uk/pdfs/ir143.htm
IMHO if you have documents confirming it, redundancy payments (not payment in lieu, etc) have tax relief.
(I hope so, cos I need to put that through for last year too).
Neil
IMHO if you have documents confirming it, redundancy payments (not payment in lieu, etc) have tax relief.
(I hope so, cos I need to put that through for last year too).
Neil
Gassing Station | Business | Top of Page | What's New | My Stuff