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HMRC taxing pensions payment made by Ltd

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    HMRC taxing pensions payment made by Ltd

    A few weeks ago I was contacted by HMRC about Failure to Operate PAYE on Directors remuneration. This came about because the amount recorded on the P14s (PAYE end of year summary) did not agree with the amount recorded under directors remuneration listed in the online CT tax return.
    I identified the discrepancy as being pension payment made into my pension scheme by the company. After sending details of this plus the requested 5 years of PAYE records I was told that the remuneration shown on the P14s was correct but asked for further details to the pension payments.
    These were made by the company via a cheque into a Scottish Widdows private pension scheme as set up by IFA and I forwarded all the details.
    I have now received a letter stating that as these payments should have been recorded on my P11d and are subject to tax and class 1 national insurance. I believed that pension payment made by the company were a tax deductable expense and did not need to be recorded as a BIC.

    The payments were paid gross and I had not claimed any pension tax relief on my SA.

    Being a qualified (but non-practiising) Chartered Accountant a do all my own accounts, Payroll and correspondence with HRMC but I will be seeking professional advice on the above on Monday.

    However I wondered if anyone else had received this type of demand or had paid tax/NIC on company payments or had sucessfully rebutted the request.

    #2
    I think this is someone in HMRC going rogue, they probably saw the contract was in your name and therefore thought it should have been P11D'd.

    This type of arrangement - gross company contribution into personal pension - is common and non contentious.

    Take professional advice if it makes you feel reassured, but TBH you could just write back and either (a) ask for review if an assessment has been issued or (b) make a complaint about wrong advice (from them) if no assessment raised. For (b) the key thing is to put "treat as complaint please" in large letters, highlighted, at the top of the page. It then goes to a slightly better calibre staff team.

    Bet you're glad your not practising now

    #HMRCmajorfail

    Comment


      #3
      Thanks Jessica.

      I thought they were wrong but am suprised they are able to send out demands like this. This could have cost the unwary £000s in false tax payments.

      Comment


        #4
        Originally posted by Acaman View Post
        Thanks Jessica.

        I thought they were wrong but am suprised they are able to send out demands like this. This could have cost the unwary £000s in false tax payments.
        At the risk of sounding too cynical, I strongly suspect they rely on a decent amount of the revenue they collect from such scare tactics. A lot of people will just pay up if they get a strongly-worded letter from HMRC, incorrectly assuming that the behemoth that is HMRC couldn't mess up something as 'basic' as a tax calculation, pension payment, etc.

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          #5
          Originally posted by captainham View Post
          At the risk of sounding too cynical, I strongly suspect they rely on a decent amount of the revenue they collect from such scare tactics. A lot of people will just pay up if they get a strongly-worded letter from HMRC, incorrectly assuming that the behemoth that is HMRC couldn't mess up something as 'basic' as a tax calculation, pension payment, etc.
          Nothing cynical at all! You're absolutely spot on.
          I couldn't give two fornicators! Yes, really!

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