# Backpayment from HSE during 2016 due to incorrect salary scale from 2012-2015



## bess (21 Jan 2017)

I hope someone can help to signpost me to the next step.

I am a HSE employee since late 2012. I was put onto a new entrant salary scale when I took up employment. I should not have been classed as a new entrant, and the HSE agreed with this in 2015. They since reinstated me on the correct point of my salary scale and agreed that I was owed backpay.

The backpay- which was approx 7,000 was paid into my salary during July 2016. It was taxed at the higher rate and in addition to my salary. I paid the higher tax rate on the payment as I was promoted to a higher grade in 2016. However my salary up until now was significantly lower. 

I am also on unpaid maternity leave at the moment, following 6 months of paid leave. Under normal circumstances i would have been due some rebate in my tax payment as there will be 3 months during the 2016-17 tax year that I will receive no income. 
I have two queries:

1. Should the tax deductions have been made at the rate that would have been paid had I been on correct scale at the time?  If so, do I contact revenue or the HSE (the HSE don't reply to any of my queries on this- it took 18 months from agreement to pay the arrears to actually paying them)

2. Am I doubly penalised as I should be receiving a rebate due to the 3 months I will receive no income, however there has been this "backpayment" from previous tax years paid this year...

Any advice on how to proceed would be very welcome.


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## mathepac (21 Jan 2017)

First off the tax-year for PAYE employees runs from 01-Jan to 31-Dec, so the same as the calendar year.

What date did you start your paid maternity leave?

What date did did you commence your unpaid maternity leave?

Were you taxed on an emergency or Week 1 basis?

Do you have a letter from the HSE detailed the payments you were owed for each tax year?

Step one would normally be to request a P21 balancing statement for 2016 using the details from your P60 which should issue soon.

If you haven't done a P21 for preceding years, they will be triggered by your request. This should give you the opportunity to allocate the back-pay to the correct tax-years and pay the correct tax.

Open to correction as I haven't had to do any of this for a number of years. HTH


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## bess (21 Jan 2017)

Thanks for that Mathepac.

I started paid mat leave on 26th May 2016

Commenced unpaid on 26th November 2016

I was taxed on Week 1 basis  (payslip from date in july where i received rebate)

I have a breakdown of the payments owed by HSE.

Pardon my ignorance on this, but do I need to contact revenue following requesting the P21 and notify them of the situation? - Give them the letter in order to allocate tax correctly?

Can this be done online?


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## mathepac (21 Jan 2017)

Keep copies of the letter because if they operate as they used to you'll need to a submit a copy with each.

Doing it online would seem the best option but I'm not sure if the back-pay spread across a number of years can be handled that way, it may need manual intervention.

First thing you need is last years P60 and make sure you have the previous years' as well. Contact Revenue and be guided by them. In my experience they are easy to deal with and helpful, much easier than HSE admin, who were the bane of my life as a contracted employee for a number of years, pre- and post- Paypars or whatever it was called that failed in the end  anyway


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## Gordon Gekko (21 Jan 2017)

So should your extra pay for 2012-2015 have been subject to the 20% rate of tax?

If so, surely they must gross it up?

i.e. pay you €7,000 x 1.33

Or will this all wash out when your P21 balancing statement is processed?


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## cremeegg (21 Jan 2017)

I think you have been given some overly complicated advice here.

There are two issues. 

You got €7k back pay in 2016 when you already were on a higher salary than you had been on when you actually earned that money resulting in you paint tax on it at the higher rate, whereas if you had been paid all along as you should have been you would have been tax at the lower rate. 

Yes that is the way it works, from a tax point of view. You have been taxed correctly, you have no issue with Revenue. You may be able to go to the HSE and say, because of their error you have ended up paying more tax than you should and they should compensate you. I don't know how likely you would be to succeed with that. Maybe your union.

The second question concerning the unpaid maternity leave and the rebate. Well this amounts to asking were you taxed correctly over the year keeping in mind that you had two non standard events, the back pay and the unpaid period. You might not be due a refund, it depends on the overall amount you earned in the year. While the HSE pay department is fabulously incompetent, (PPARS anyone), even they should be able to get this right.

To check look at your P60. It will show how much you earned and how much tax you paid. It is a simple matter to check if the tax was correctly calculated. If you don't know how to do this yourself anyone familiar with payroll will be able to help you.


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## jjm (22 Jan 2017)

Revenue will allow provided your employer gave you a breakdown for the years affected. Just go to revenue and explain and please report back  hear  .I already know they will allow.


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## Joe_90 (22 Jan 2017)

PAYE is operated on the date of the payment. If they have a cumulative cert then week 1 should not apply.

So in 2016 you have 11 months of your correct salary and an extra €7,000. So all of the €7,000 is taxed at 40%.

If you get your P21s for 2013, 2014, 2015 and you did not pay tax at 20% then you are are entitled to allocate the back pay to the correct year.  If you are jointly assessed then you may have already received the benefit.


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## cremeegg (22 Jan 2017)

In my understanding of tax law jjm2016 and Joe_90 are wrong.

Income is taxed in the year in which it is paid, not the year in which it should have been paid.

I have tried to find an authoritative source for this and the best I can come up with is,

"Tax must be deducted or refunded in accordance with the tax credits and standard rate cut-off point due and the tax rate applicable at the time the payment is made. This is so even if all or part of it was earned or treated as earned in a previous or coming income tax year. "

from the employers guide to PAYE here  http://www.revenue.ie/en/business/paye/guide/employers-guide-paye-tax-due.html


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## mathepac (22 Jan 2017)

Gordon Gekko said:


> Or will this all wash out when your P21 balancing statement is processed?


A lot of it should given the extended period on Week 1 basis & maternity leave in 2016. The P21 request may trigger requests for returns for preceding years.


cremeegg said:


> I think you have been given some overly complicated advice here.


The only 'advice' the OP has been to wait for the P60 for 2016 to issue and then contact Revenue for advice and to request a P21 for the year. What's complicated about that? Please don't confuse the issue.


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## mathepac (22 Jan 2017)

jjm2016 said:


> ust go to revenue and explain and please report back hear .I already know they will allow.


As do I from experiences similar to OP (not maternity leave though! That would really have confused them!)

The Revenue is not the faceless bureaucracy some people portray it as.  They work hard for a living and are diligent but fair. Situations where back pay spans a number of years they will deal with sensitively IME.


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## Joe_90 (22 Jan 2017)

cremeegg said:


> In my understanding of tax law jjm2016 and Joe_90 are wrong.



It could be that your understanding is wrong!

If the OP was due a payment in 2016 of €15,000, €5,000 for each year 2013, 2014 & 2015.

The payment would be subject to PAYE in 2016 which is correct but an application to Revenue to have €5,000 included in each year resulting in an overpayment in 2016 and underpayments in the previous years.


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## torblednam (22 Jan 2017)

@cremeegg 
You're falling into the trap of confusing the rules for the collection and remittance of tax under the PAYE system (i.e. How employers have to operate PAYE), with the assessment of income tax on the individual.

There is case law and plenty of precedent that a taxpayer is liable to tax in the year of assessment when income is earned.


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## jjm (22 Jan 2017)

cremeegg/mathepac/gordon/joe/bess Employers cannot give it back open to abuse.HSE have done everything correctly. Revenue can and will go back as long as the have to to sort it our .Bess just ring revenue up they will adjust everything as it should be once you supply hse breakdown information.Please report back to help others in the same position as yourself .


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## bess (22 Jan 2017)

Thanks all very much for your replies. I will igive revenue a call when my p60 for 2016 is issued and i'll be happy to write here what the outcome is.

Much appreciated.


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## mathepac (22 Jan 2017)

jjm2016 said:


> cremeegg/mathepac/gordon/joe/bess Employers cannot give it back open to abuse.


 I can't see where anyone suggested they should or that they were expected to


jjm2016 said:


> HSE have done everything correctly.


The HSE were the cause of the set of circumstances by delaying paying the OP at the correct rates for a number of years. Administratively they are a complete disaster. I speak as someone who like the OP suffered the HSE way of doing "everything correctly" for a number of years.


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## tommygirl (23 Jan 2017)

I was previously in this situation with back-payment from the HSE. I sent Revenue the HSE letter advising the annual breakdown of the payment and I received balancing statements for each year resulting in a large refund of tax. This was in 2011 and payment went back to 2008. Hope this helps


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## jjm (24 Jan 2017)

Re your post  16,( HSE have done everything correctly) I explained  it badly Bess asked  on post no 1  .Do I contact Revenue or the HSE to sort out .When the HSE paid the 7000 Euro in 2016 she was paid correctly no point in going back to HSE.
(I cant see where anyone suggested they should or that they were expected to) In the case I was involved in and the back pay was for about 10 years several people close to the action expected the  HSE to sort tax and did not want to go to Revenue .(HSE /Employer problem to sort.
As the song says Let it go


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## torblednam (24 Jan 2017)

In that case HSE would have to "sort the tax" for some of the back years, as Revenue are statute barred from making a repayment going back more than 4 years.


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## jjm (24 Jan 2017)

not correct torblednam .Lots of posters think they know it all .It is people who thought the knew it all and did not check who caused some of the problens in the first place.Welcome to AA,The person  I know just walked in to revenue with all the supporting paper work they said it would take some time to sort .


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## torblednam (24 Jan 2017)

Well meeee-ow! How can you know whether I know what I'm talking about or not?! 

Have they actually received their money back from Revenue for the years more beyond 4 years old?

I know of at least one case where they have not repaid the tax to someone in those same circumstances.

Section 865 of the Taxes Consolidation Act 1997 being the relevant statutory provision, and it's not something they have discretion in applying.


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## Sophrosyne (24 Jan 2017)

cremeegg said:


> In my understanding of tax law jjm2016 and Joe_90 are wrong.
> 
> Income is taxed in the year in which it is paid, not the year in which it should have been paid.



This is incorrect.

Income relates to the year it is *earned*: McKeown v Roe, Irish case vol 1, p 206, Dracup v Radcliffe, vol 27, p 188, and Heasman v Jordan, vol 35, p 518.

Income tax deducted under PAYE relates to the year the income was *paid*: Bedford v Hannon, Irish case - Leaflet No. 105.

Therefore, the advice given by mathepac and Joe_90 is correct.


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## jjm (24 Jan 2017)

Torbelednam. Not referring to you SORRY . They got tax back for all of the years .


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## cremeegg (24 Jan 2017)

Sophrosyne, thanks for pointing this out, and especially for referencing your point. I haven't Googled the cases you refer to but I am sure you are correct.


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