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Posted Thu, 04 Jan 2024 23:03:16 GMT by Username177
A former employer has reached out to me saying that during the current tax year they incorrectly processed a one-off payment, paying me gross rather than through the correct payroll/PAYE system. They say that this has resulted in a income tax and NIC liability, and are asking me to pay them the amount they say should have been deducted for income tax and NIC, so that they can re-process the payment through payroll (paying the income tax and NIC) and re-issue my P45. I complete a self assessment every year, so any income tax that should be paid will be corrected upon filing the tax return, so I do not believe I should pay my former employer anything, and will just make any tax correction with HMRC at year end. For the NIC, having read the HMRC documentation, I understand that it is the employer's responsibility to correct for the underpayment of NICs immediately upon realising, and then they are permitted to reclaim that NIC from an employee from future payments. Given I am no longer an employee, there is no way they can claim from my future payments. I do not see why I would make them whole for their mistake. Am I liable for this underpaid NIC? If so, I would rather settle directly with HMRC at year end than with my former employer. Please can you advise on this situation? 1. Do I need to pay my FORMER employer for income tax they failed to claim through PAYE, or should I settle at year end directly with HMRC? 2. Do I need to pay my FORMER employer for NIC they failed to claim through PAYE? Many thanks
Posted Fri, 12 Jan 2024 10:31:41 GMT by HMRC Admin 20
Hi Username177,
How the employer and employee agree to settle the money is between them, HMRC would not get involved.
The employer cannot reissue a P45 so you may receive a letter instead detailing the information.
Thank you.
Posted Fri, 12 Jan 2024 11:10:58 GMT by Username177
Sorry - this relates to income tax and NIC so I don’t understand how HMRC would not be involved? Currently, no NIC has been paid on income received due to my former employers error. As I no longer work there they have no mechanism to reclaim from me other than asking me to pay them back. I am trying to understand if this is my liability to HMRC or my former employer’s liability to HMRC. If I have an NIC liability to HMRC I would rather settle directly with HMRC rather than via my former employer. Please can you clarify these points
Posted Tue, 16 Jan 2024 10:42:36 GMT by HMRC Admin 32

The employer would pay back the underpayment ie against your record, it is then between you and the employer how or if they reclaim the money from yourself. Because the employer would have alrready paid this money to HMRC, we do not get involved in how they recover the funds.

Thank you.

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