Paying back TAX - what have the MOD done to army pensions?

Discussion in 'Army Pay, Claims & JPA' started by MS2391, Oct 21, 2010.

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  1. just got a demand from the tax office for £2.5k for tax for the last two years. turns out the MOD pensions office decided to ignore the tax code sent by the tax office and took wrong tax. Any one else have this problem and did you manage to get anywhere with it?
  2. Extra Statutory Concession A19 is your blessing

    "Arrears of income tax or capital gains tax may be given up if they result from the Inland Revenue's failure to make proper and timely use of information supplied by:
    a taxpayer about his or her own income, gains or personal circumstances
    an employer, where the information affects a taxpayer's coding; or
    the Department for Work and Pensions, about a taxpayer's State retirement, disability or widow's pension.
    Tax will normally be given up only where the taxpayer:
    could reasonably have believed that his or her tax affairs were in order, and
    was notified of the arrears more than 12 months after the end of the tax year in which the Inland Revenue received the information indicating that more tax was due, or
    was notified of an over-repayment after the end of the tax year following the year in which the repayment was made.
    In exceptional circumstances arrears of tax notified 12 months or less after the end of the relevant tax year may be given up if the Revenue failed more than once to make proper use of the facts they had been given about one source of income or
    allowed the arrears to build up over two whole tax years in succession by failing to make proper and timely use of information they had been given.”

    If MoD fucked up then throw back to them as well. I suspect you'd strongly want to say hello to a good Lawyer as you can reasonably argue that MoD made the error, not you. Be prepared to say "Small Claims Court" to recover the £2.5K you may have to pay that MoD should have deducated.
  3. oldbaldy

    oldbaldy LE Moderator Good Egg (charities)
    1. Battlefield Tours

    MOD don't pay the pensions. Xafinity pay them on the MOD's behalf.
    Small but important point.
  4. Seems to be a pretty standard occurrence and something I warned about on this site about 4 years ago.

    When you leave the Forces and get a new job, don't assume the same tax office will deal with your new salary tax and your Armed Forces pension, they will be treated as separate tax liabilities and will probably result in you underpaying tax unless you let them know. Sad but true.

    I caught mine in time and wrote to them, did a tax return for a year's worth and had the rest written down.
  5. If you had phoned HMRC when you had the P60s from your pension and other earnings, this should not have happened. HMRC usually have to work off the known figures, which invariably means last years.

    You should also have received two tax coding notices (assuming you have two incomes), if you don't check the figures they are working from and notify any errors, who is at fault?
  6. In the past whenever I have changed jobs I always inform HMRC office at Ty Glas. When I left in 99 I was advised during resettlement that as an MoD penisoner they were always my main tax office. My personal allowances are held against my pension and they always advise the tax office used by my new employers of the correct coding to apply.

    I usually plead ignorance and beg their advice and help, I have always found "the little old lady" at Ty Glas to be very helpful.
  7. It sounds as if the personal tax threshold has been applied to your wage as well as your pension. One of these sources of income should have had a BR tax coding applied to it. The tax office recieves P60 from both your employer and xafinity paymaster and have failed to act upon it.

    To those advising to use Extra Statutory Provision A19 to have the amount remitted, a word of caution.

    If this situation has predated the tax years 2008-2009, be cautious of the information you provide, as HMIT can pursue personal underpaid tax to the years 2005-2006 onwards. I believe I am correct in this, as I am in a similar situation.

    Further advice may be sought from the Low Incomes Tax Reform Group. Link below:

    Low Incomes Tax Reform Group - Home

    Best of Luck.

  8. Do you work for HMRC perchance?

    I would argue that the majority of the population who are on PAYE are under the assumption that the tax office, the taxation "subject matter experts", have applied the correct codings from the information provided by employers, pension providers etc. P60s tend to be another form to be filed with little scrutiny applied. For those on self assessment, I would also argue that being tax savvy comes with the territory.

    As for fault, HMIT have undoubtedly screwed up, as the error figures indicate, but as with most Government Departments, the acceptance of responsibility evades them. Indeed this responsibility is abrogated to the taxpayer who has neither the specialist knowledge or resources to represent him/herself.

  9. Nope, having seen that HMRC have been cocking up tax (especially when two incomes are involved) for a while, I took the time to check my tax coding when I started getting two notices. My original point about checking the P60s still stands. If you are aware that anyone has a habit of charging the wrong amount, you are a fool for not checking the figures. It is not that difficult to work out a ball park figure for the amount of tax you should be paying.

  10. The HMRC should not be in the habit of charging the incorrect amount of tax.

    You appear to be in the minority of the population, in that you understand the tax system and have been proactive in sorting out your tax affairs. If the income tax error trawl continued back 6 years it is estimated that some 18 million people have been affected, an astronomical figure of, in your words, foolish people.

    As for it being simple to reach a ball park figure allow me to quote the current Chancellor of the Exchequer:

    Link is Office of Tax Simplification - HM Treasury.

  11. Mad Mac,

    Do you check your change when you have bought a round? Do you check the bill when you have your car serviced? Do you check your tax coding?

    I do not pretend to understand all of the nuances of the tax system but I understand enough to confirm what I think I should be paying.

    If I am in the minority, then the majority are fools.

  12. A rather inaccurate and simplistic comparison “shiney”.

    It is not a new complaint that income tax is to complex to comprehend. In a Parliamentary debate in 1853 Members of Parliament urged the then Chancellor of the Exchequer William Gladstone, that income tax legislation was made intelligible to everyone, even those who had not benefited from a legal education. He replied that:

    The first consolidation of income tax in 1918 produced an Act of 177 pages. The 1952
    Consolidation Act was 687 pages and that of 1970 1,297 pages. The consolidation of 1988 with the 1990 consolidation of capital allowances produced 2,796 pages. By 1995, primary legislation on income tax, corporation tax and CGT had grown by 253% since 1970 (from 1,297 to 4,580 pages) and secondary legislation by 744% (from 171 to 1,444 pages).The draftsman of the first rewrite Act – the Capital Allowances Act 2001 – commented in 1996 that:

    The rewrite of income tax alone has taken four Acts of increasing length. Two (possibly three)Acts will follow shortly to rewrite corporation tax and to deal with the residual elements of the Income and Corporation Taxes Act 1988. It is anticipated that the first corporation tax rewrite Act will be the longest single piece of legislation ever put before Parliament. In 1995, primary and secondary legislation on income tax, corporation tax and CGT ran to 3,856 pages in Butterworths Tax Handbooks and in 2007 it covered 6,564 pages.

    The normal tax payer is subject to a much wider range of tax issues than you seem to allude to.

    The average family is subject to taxation from income, benefits, both universal and individually accrued such as working tax credit, child tax credit, family element tax credit and a manifold of other intrinsically and extrinsically linked taxation matters.
  13. Mad_Mac,

    I don't think it's inaccurate (as it illustrates my point very well), and I deliberately kept it simple. I was arguing the point about people needing to check their Income Tax, whereas you seem to be widening your arguements to many of the other taxes we are subject to.

    I happen to agree that the UK tax system is overly complex.

  14. HMRC wanted £2,597.40 from me. I sent them a letter on Oct 27 quoting ESC A19, just got my reply today which states:

    "......after looking at our records, I agree that you do not need to pay the following amounts."