Citizenship query related to income tax

[dex123]

Well last week I booked an NCS appointment for midweek this week and a couple of days later I got my tax calculations sent to me by HMRC. I have been working in UK for last 6 years or so, always on PAYE.

Basically I have never filed tax-returns on my own becuase I am on PAYE and HMRC sends me the tax-calculations whenever there is any under or over tax payment and then adjusts the the tax code. The issue is that for the FY 2007-08 and 2008-09 I have an underpaid tax of about £300 each. So in total I owe HMRC about £600. The reason for underpayment is that benefit-in-kind (which I guess is the subsidized gym membership from my company) in my tax-code was lower than the actual amount taxable.

In the letter HMRC said the underpayment will be collected through my tax-code in 2011. I called them as soon as I got this letter. Of course the guy from HMRC couldn't say whether or how it could affect my citizenship application. It didn't seem to be a big 'crime' as far as he was concerned but he couldn't confirm what their reponse would be if Home office sent a query. Now I got worried that HMRC might repsond saying - 'this guy has underpaid tax of £600 from 2007-008 and 2008-09 which will be collected in 2011'. It will probably look bad (though no fault of mine as my company and HMRC should have sorted it out). So I asked them if there was an option for me to pay this right away. Well what do you expect! They can't take payments over the phone. Only option is to ask for a payment slip which they send in the post (2nd class) and then also I can only attach a cheque. Its been about 5 days and I am still waiting for the payment slip to arrive.

My worry is this. Since my NCS appointment is in 2 days time, I may have to make my citizenship application while I have not received the payment slip from HMRC. Even if I receive it within next couple of days, god knows how long they will take to process and update their records once I send the cheque. I will definitely discuss this in my NCS appointment. But what do you guys think? Do you think I am unnecessarily getting worried? Anyone with similar experiences? Any other options you think I could try?

Thanks a lot in advance.

[dex123]

Having talked to HMRC again it seems like a more routine thing. Basically the company declares P11D benefits in kind to HMRC after the tax year is over and then they take another few motnhs to adjust the tax-code to account for it. So for P11D benefits there is always a lag of at least a year before HMRC adjusts the tax code to recover the under-paid tax.

I am a bit more comfortable now. I always get about 2 HMRC notices for change in tax-code every year. Never bothered to go into the details earlier. But this time I was mroe worried.

Hopefully shouldn't be an issue. Ideally I would still like to pay them straightaway but they said the payment slip will arrive in about 14 days and they can't accept payment any other way.

[abi_abc]

This is a very routine situation and has been much in the news recently.

http://www.bbc.co.uk/news/uk-11186397

I doubt very very much if it will affect your citizenship application. So please don't worry about it.

HMRC are going to collect the underpaid tax through your future salary and seem to be quite happy to do this. They aren't viewing it as a crime and neither should you. You have been paying your taxes as expected under PAYE. I wouldn't bother paying it in a hurry now unless you really want to. Just let HMRC collect it as they have said. Just make sure you agree with their calculations because they're not always right!! If you do pay now make sure HMRC don't collect it again (ie twice) through your code as well!!

HMRC staff won't have a clue if it would affect your citizenship applicaton and probably neither will UKBA staff.

All the best.

[dex123]

Thanks abi_abc. I have offered to make the payment and am waiting for the pay-slip however they said they will change the tax-code for next year anyway (to collect the under payment) and will reverse it if and when I make the payment based on pay-slip. So they said that I have the option to ignore the payslip.

Its comforting to know that there are millions of people who fall into this category. However I am surprised that there is no option to pay over the phone for those who want to pay it that way. I think HMRC sends the pay-slip along with tax-calculations only if the tax-due is more than £2000 otherwise one has to request it and then wait for it.

[ukpl]

If you do pay now make sure HMRC don't collect it again (ie twice) through your code as well!!

be sure they will collect it twice
that's the way it works (unfortunately)
they have already changed the code and I very much doubt they will reverse it when OP pays upfront and inform OP's employer about new-old one

[dex123]

Thanks ukpl. In my case they have changed my tax code in some years 2 or 3 times as well, so I don't see why they can't do it again. In any case they planned to collect by a tax-code change in 2011-12 so there is still time to go and they can easily change it if the wanted to.
I got the payment slip yesterday and have now sent the cheque. However I will keep this in mind and make sure that my tax code gets adjusted after they take the payment form my account.