Previous employer underpaid TAX

I would appreciate any advice on my current situation.

I recently applied for sole trader status as I am now working as an IT contractor.

As part of this the revenue seem to have gone back through my tax history over the past several years and I recieved a letter from them demanding nearly €3,000 in tax underpaid for the tax year 2004.

At that time I was a PAYE employee and changed jobs around the begining of June 2004 to another company where I was once again a PAYE employee.

From what I can make out from the limited details on the form I was sent, my first employer appears to have paid no tax at all on what I was paid for during the first 6 months of 2004. Of course to top it all my bank records of the time aren't available at the moment as I never recieved them back from my mortgage provider when I applied for a mortgage in that time period. We never recieved any payslips with regard to our wages so no records there either. As far as I can remember I was paid the after tax figure as I would have been normally (I worked ther for 1.5 years).

To me this implies that the company in question never paid my tax as they were due to do so under the PAYE system and therefore it is them who are liable for any underpayment of my tax at the time.

Is this the case? According to the small print on the revenue letter I have 30 days to appeal this demand for payment. I'd appreciate hearing what the best course is to take in this case. Thanks.

Did your wages at the time suggest that you were paying tax? I would contact the company and ask for their records, which they are obliged to keep. You are legally entitled to payslips too.

edit to add: sorry, missed that line in your post. Contact your bank and get duplicate statements, you need to see what you did get. If you were getting an after tax amount, then the proof will be on your monthly salary cheque.

In the absence of payslips what about P60s for the relevant periods?

machalla said:

To me this implies that the company in question never paid my tax as they were due to do so under the PAYE system and therefore it is them who are liable for any underpayment of my tax at the time.

Is this the case?

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No - you are ultimately responsible for your tax affairs. However your former employer would also have some responsibility if they were ostensibly deducting tax/PRSI through payroll but not remitting it. I would imagine that Revenue will look into this scenario automatically or if you prompt them to.

According to the small print on the revenue letter I have 30 days to appeal this demand for payment. I'd appreciate hearing what the best course is to take in this case. Thanks.

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I would recommend that you talk to a professional tax advisor ASAP.

You will also want to check your PRSI contribution records with SW in case they were deducting PRSI but not remitting it.

When you changed jobs in June 2004, you should have received a P45 from your old employer, which you then either passed on to your new employer, or if you wanted to hide your previous earnings, sent to your local tax office. (Unlike me, if you were smart, you kept a photocopy.) This invaluable document shows tax and PRSI deductions, employee and employer, pay, tax credits, SRCOP, insurable weeks, PRSI class(es), finish date, etc. In the absence of this document, how did your new employer calculate your standard deductions correctly? Or, if the data on the P45 were wrong, how did your new employer calculate your standard deductions correctly?

The outfit I worked for last screwed up royally, but unlike you, I got good news from the tax office last week of a review which netted me a cool 30k refund on my P21's. My current employers spotted the mistakes when I presented my original P45 AND the "corrected" ones over two years ago.

I hope it works out for you. Keep us posted.