About six months ago I received a letter in the post, the kind of letter that doesn’t necessarily fill me with dread, but one that certainly makes me sigh and feel a bit hesitant about opening. An A5 brown envelope, addressed to my full name and with HMRC emblazoned on the top-left. Her Majesty’s Revenue & Customs. The UK tax department. Which I guess is now His Majesty’s…
I have in the past received cheques from them for tax refunds, one year it was about £400 I remember, but let’s be honest, those are very few and very far between. And I was right, this one did have a sizeable figure on it, about £680, but it was in deficit. HMRC proclaimed I owed them this amount.
My salary is relatively straight forward, as is the taxation of most workers in the UK. I’m on PAYE – basically an automated system – I don’t have anything related to my monthly pay that would complicate it in any way. My salary is pretty much the same every month and my tax is easy to figure out. At no point in the year in question did I think to myself I had received more than normal. I know I hadn’t paid too little in taxes.
I ignored the letter for a few days.
About a week later the payroll department at work received a similar letter instructing them to change my tax code because of the supposedly owed amount. The tax code meaning a little more will be deducted each month in order to repay the owed amount over the course of the coming year.
Thankfully I work in a small office and I am not just a payroll number. I work directly opposite the payroll manager actually, we are literally about 3 metres apart. They know me (to a degree) and I know them (to a similar degree). The payroll manager did a manual check and came the same conclusion as me. I owe HMRC the square root of diddly squat. My tax is correct.
Now, thankfully no one knows who I work for or who my payroll manager is (and actually now ‘was’ – they’ve moved on to bigger and better things), but needless to say they will remain anonymous. The payroll manager, having completed a manual calculation and concluded they and I were correct, told me they wouldn’t update my tax code.
I thought about that for a while. It is technically incorrect I believe. Possibly even professionally sanctionable – I’m not a payroll person but it wouldn’t surprise me if it was something that can lead to fines being levied. But my choice was to accept HMRC are wrong and do nothing. Everything works out in the wash and they’ll soon realise they were wrong. Or I could go down the alternative root and spend my time collating information in a more formal way than I had done to work out my tax previously, call HMRC and spend hours, possibly days or even weeks getting them to understand my taxes were correct.
We ignored the letter.
Fast forward about six months and this evening I arrive home to find another of these brown envelopes waiting for me. I kick my shoes off, get myself comfortable and tentatively open the letter.
So apparently I do owe HMRC money. It turns out I have underpaid tax in the previous year and they will be reclaiming it from my pay. But now it is a different amount. It is no longer £680.
According to the government department that calculates the working nation’s taxes, I owe them a whopping £1.80.
To be perfectly honest, I’m in the sort of mood that I might now actually call them, wait on hold for an eternity and then dispute it. Just to waste in excess of £1.80s worth of their time. Just be bloody-minded. Just to be annoying.
Also, that £1.80 isn’t being collected by HMRC in instalments. Oh no, they are taking the full whack off my next salary (assuming the new payroll manager adjusts my code, for literally one month).
So is there a lesson here? Well it was clear HMRC were wrong. And one can presume somebody, somewhere, noticed the tax code hadn’t been changed and probably spent 30 seconds of their time doing a manual calculation themselves and figured it out.
But had my code been changed six months ago, they would owe me, to the approximate tune of £340. And they probably don’t issue cheques anymore, so my tax code would have to be zeroed for a month-and-a-bit. And then changed back. Essentially, complicated.
I guess I shouldn’t encourage disobedience, and for the record I never have. But when it is as clear as day, when the error is so glaringly obvious, maybe the only way to get a human to notice and step in is to literally do nothing.
It’s actually an offence to wilfully not pay your taxes in the UK and a non-payer could technically be taken to court and imprisoned. To be honest, for £680, it is unlikely. Especially as my employer is the ‘go-between’ in this case. I am the kind of person who believes fair taxes should be paid.