PAYE problem

I have just been advised of a PAYE problem for 2007-08. A small business took on a sales person at £50 000 p.a. plus car and other benefits. The business operated PAYE manually — there are not many employees — but only deducted tax at the basic rate. It seems that they realised their mistake when they 'ran out of basic rate band part way through the year'! In mitigation there were no other higher-paid employees and we deal with the director's PAYE affairs. The employee wasn't keen on paying tax at 40% on the balance of his earnings for the rest of the year so they operated his code on a 'Month 1' basis.

We have prepared the employee's tax return and naturally there is tax owing. Whose responsibility is this the employee's or the employer's? Neither will be very happy and we would like to...