Coding up the wrong street

The appellant who ran a small bus service appealed against HMRC decisions for an under-deduction of PAYE tax during the tax years 2004/05 to 2006/07.

The problem arose when the appellant expanded his business by employing an additional driver in 2004. The employee said his work as a driver was his only or main job and that he received a pension as well as his employed wage.

The appellant used the wrong tax code 474L using the week 1 basis instead of BR which led to the under-deduction of tax.

However it was not the misuse of tax codes that was under dispute rather how reg 72 of the Income Tax (PAYE) Regulations 2003 should be applied to the underpaid tax. Regulation 72 provides whether underpaid tax is payable by the employer or the employee.

It removes the liability from...