P60 Problem

M

mo3art

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Can anybody please clarify what the Revenue's situation is about incorrect P35 submissions and subsequent incorrect P60s issued?

To clarify, it appears that my friend's gross salary was adjusted without his knowledge to enable his employer to benefit from a tax loophole. His net salary wasn't affected but his employer benefited from a reduced tax bill.

He only found out today when he requested a statement of gross earnings for mortgage purposes and it appears according to the submissions to the Revenue Commissioners that his gross salary could be understated by as much as €10K.

Without going into the rights and wrongs of the situation etc, can anyone clarify if it is possible to have a P60 amended at this late stage and what needs to be done? Thanks a million

Mo
 
Sounds nasty - What kind of company was it (without naming them)? Big/small? public/private? Have the company admitted the issue? Has your friend informed Revenue of what happened?
 
Does the employer make any pension deductions form your friends gross salary?

If so , then you're only taxed on the remaining amount and this will be less than the gross salary and I thinks its the figure that appears on the P60.

Could this account for the difference?
 
The first thing the employee should do is to make sure that the information they received from the Revenue is correct. It is not common, but not unknown, for the Revenue to issue incorrect information when requested to confirm employees' P60 details.

In the current business environment, it is inconceivable that any quarter-decent company would attempt a scam such as descibed above unless you are talking about literally a gangster outfit
 
Unless your friend was employed under a "net pay agreement" then he would be entitled to ask the employer for the balance of his wages (less any tax due), as he has not been paid the difference between his previous "gross" and his new "gross"

i.e. if his contracts states a gross amount for wages then is employer is only entitled to deduct the correct amount of tax not adjust the gross amount to suit the net

If he has a contract that is

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No contract, no payslips, and it's a small operation.

He agreed to receive the same amount of pay each week and trusted that the tax affairs would be taken care of. He was alerted that there might be a problem when he received his P60 in Jan of this year after being employed for 12 months. He requested that it be changed to what he assumed his gross salary to be and heard no more, as I mentioned, it came to a head when he requested a salary statement for mortgage purposes.

He has received all payments in accordance with the net pay he requested but it appears that the company was claiming expenses for him without his knowledge in order to bring down the gross pay element of the tax bill and therefore reduce their liability.

The company directors say that they had no knowledge that their accountant (a private practicioner) was doing this. The accountant now claims that he cannot change the P60 - due to it being a legal document issued by the revenue commissioners (I would have thought that he could submit a P35 amendment form) and the gross salary stands. But it's becoming clear to me that perhaps in admitting to the Revenue Commissioners that the P60 is wrong that he could be accused of malpractice and unethical conduct.

His excuse for doing this is that he was trying to save the company money and as the employee had already bought a house he never thought that he would be looking to remortgage. The employee's gross salary is now barely over the minimum wage and it would be extremely unlikely that he would be able to even finance a small personal loan with his P60 and gross salary as it stands.
 
He has received all payments in accordance with the net pay he requested but it appears that the company was claiming expenses for him without his knowledge in order to bring down the gross pay element of the tax bill and therefore reduce their liability.
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The key to this question is what I have highlighted above. If the employee claims he never knew of the expenses arrangement and the employer claims that he did, then it is his word against theirs.

A few questions:

1. Does the company have other employees in receipt of these expenses?

2. Did your friend receive similar levels of expenses in past years?

3. Did your friend ever sign an expense claim form that is required under Revenue rules for the expense payment to be treated as tax free?

If the answers to any of these questions is yes, your friend will have a tough time trying to prove that he knew nothing. If the answer to question 3 is no, then, according to the law the expense amounts must be treated as taxable pay and taxed accordingly. In that scenario your friend will be entitled to an amended or supplementary P60.

By the way, I don't really understand what the problem is in relation to the mortgage application as lenders will usually be happy to consider confirmed expense payments as being part of total pay for mortgage eligibility.
 
No, u - the employee was unaware of the expenses treatment of his salary, as was his employer. The company accountant only told them yesterday. He signed no forms at all.
 
Hi Mozart
the employee was unaware of the expenses treatment of his salary, as was his employer.
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Frankly, it beggars belief that both the employer and employee knew nothing. Why would the accountant take risks to save his client (the employer) money in PAYE/PRSI bills, and not even bother telling the client? It doesnt add up. Nor does it add up that the accountant would refuse to issue a corrected P60, if that was their perogative in the first place. If an original P60 is incorrect for whatever reason, there is an obligation on an employer to correct it. Such amendments are reasonably common in accountancy and payroll practice. Btw, it is wrong to say that a P60 is "a legal document issued by the revenue commissioners", as it is issued in each case by the employer.
 
If the employee should have received expenses then this is not part of his salary at all net or gross, it should only be reimbursement of incurred expenses or allowable mileage/subsistence allowances.

If they have made up the expenses then that is of course a whole other story.
 
Hi U, yes I agree about the statement about the legal document.

It does beggar belief, unfortunatley he is employed by family, which means that he placed his trust in his family that the payroll would be sorted and wasn't as aggressive as most would be when the error came to light.

The employer instructed the accountant to use all means necessary in reducing their tax liability and the accountant interpreted that accordingly. He claimed for expenses, which the employee was never in receipt of, and used the expenses to top up the gross salary, to give the weekly net figure.

I do not agree with this method at all, and apparently now the accountant (who has responsibility for all the company accounts) is refusing to amend the P60 for the year 2004. This puts the employee in an extremely bad position but he is caught between a rock and a hard place as he is employed by family and is loath to rock the boat and cause trouble for his family business.

A cautionary tale methinks for anyone thinking of working for family...........
 
Hi mo3art,

If the employee was in receipt of expenses in lieu of salary, surely this can be verified to his lender for mortgage purposes - particularly as he is employed in the family business.

For their own sakes (individual and family) they really ought to implement proper procedures for the payment of expenses, and sort out the issue of any tax underpayment before the Revenue find out and hang them out to dry.

The family members' stance of denying all knowledge of the position to date (despite the fact that somebody in the company had to sign the accounts and P35 for 2004 and earlier years) and trying to pin all the blame on their accountant sounds to be a very immature way of approaching an issue such as this. Were they brave enough to say this to their accountant's face?

Btw, you would have saved us all a lot of time and effort in addressing your query if you had told us in the first instance that your friend works in his family's business. To say that
(his) gross salary was adjusted without his knowledge to enable his employer to benefit from a tax loophole. His net salary wasn't affected but his employer benefited from a reduced tax bill.
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without mentioning the fact his family was his employer is misleading to say the least.
 
U - sorry it took so long to get back to you.

I agree wholeheartedly that ignorance is no excuse and considering his family have signed off on the company accounts for last year, I would assume that they had known what was being done.

I don't see how the fact that I didn't mention it was a family company was misleading - AFAIK family companies are not treated any differently as regards to employment law.

I apologise if I overstepped the forum guidelines

Regards

Mo
 
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