Employees tend to believe the figures included in the P60s and P11ds prepared by their employers, but they could be leaving themselves open to penalties if they copy incorrect figures on to their own tax returns.
This is what happened to Ringo Scheithauer. He was employed by Dunhills on an annual salary of £306,772 for 2016/17, but the P60 he received from his employer showed pay of £167,605.48 with tax deducted of £71,679.19. He queried the P60 figures with his employer but was told they were correct, so he reported them on his tax return.
Unfortunately, the employer had issued an inaccurate P60 as part way through the year the payroll function had been moved in house. The earnings for the period to September 2016 were included on a P45, but Ringo said he didn’t receive that form. He also forgot to include his taxable benefits, as reported on the P11d, but the case report doesn’t give a reason for that.
HMRC issued Ringo with a penalty of £694.15 for a careless inaccuracy on his tax return, being 15% of the undeclared tax of £4627.73. Ringo argued that his mistake was not careless as he had taken care to check the figures with his employer. HMRC said he should have compared his P60s to his monthly payslips, or contacted a tax adviser for advice. The FTT confirmed the penalty.
HMRC is trialling a new income recorder viewer to allow agents to see all PAYE and tax deducted details for clients.
Written by the Tax Advice Network