Unreasonable demand

The taxpayer worked in hospitals in Sussex. He underpaid tax in 2010/11 as a result of his employer using an incorrect code against is earnings.

HMRC told the taxpayer he owed tax of £6 076. He queried the sum. The department clarified the figures with the employer and confirmed them to be correct – by which time a late payment penalty had arisen on the underpayment.

The taxpayer appealed against the tax and the fine saying that it was the fault of the employer that insufficient monies had been deducted from his earnings.

The First-tier Tribunal said the Revenue could have issued directions on the employer – under Income Tax (PAYE) Regulations 2003 regs 72 or 81 – to collect the underpaid tax because the errors were caused by the employer.

But the department had not done so meaning the tax that should have been deducted...