Company car Benefit in Kind

Cece2017

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Looking for some advice please. I work on the road here for a company with a London based head office. All payroll HR is done from London. They have since discovered they have not been processing benefit in kind tax on a company car I’ve had use of since I started a few years ago. I had asked payroll when I started and was told yes it was deducted but not in writing. They are now looking for me to pay the backdated tax via my deduction from my payroll. Is this legal? It was my understanding it’s the company’s responsibility to process taxes correctly , however does the tax bill lie with me?
 

torblednam

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433
Because it your tax bill. It's your responsibility.
I’m not sure Revenue will see it that way. While strictly speaking one could argue that the employee should be liable - and I’m only talking about historic periods as I’m not sure how it would be dealt with under the new modernised PAYE rules - I’ve never seen any instance in practice where Revenue haven’t looked for the underpaid tax from the employer.

You’re then into a legal / contractual argument between the employer and employee, as to whether the employer has any recourse to the employee for sums that it ought to have deducted but didn’t.
 

mathepac

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@Cece2017 have you made any tax-returns or requested any end-of-year P21 balancing statements during your time with the company? If you haven't. it's moot as to where the responsibility lies for the underpayments.
 

Cece2017

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@Cece2017 have you made any tax-returns or requested any end-of-year P21 balancing statements during your time with the company? If you haven't. it's moot as to where the responsibility lies for the underpayments.
I have done p21 balancing statements for the last 4 years. Everything was up to date for the years that I’ve been with the company.
 

Sunny

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I’m not sure Revenue will see it that way. While strictly speaking one could argue that the employee should be liable - and I’m only talking about historic periods as I’m not sure how it would be dealt with under the new modernised PAYE rules - I’ve never seen any instance in practice where Revenue haven’t looked for the underpaid tax from the employer.

You’re then into a legal / contractual argument between the employer and employee, as to whether the employer has any recourse to the employee for sums that it ought to have deducted but didn’t.
It doesn't matter who pays revenue. The employee or the employer. The employee can arrange it with revenue themselves if they want. The fact is that the employee had a taxable benefit that they didn't pay tax on. The tax liability is the employees, not the employers. If the employer pays the liability, they are entitled to recoup the money. I know it's annoying but the BIK on a company car is not insignificant. I am not sure how someone would not notice it. I know I would on my payslip!!
 

torblednam

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It doesn't matter who pays revenue. The employee or the employer. The employee can arrange it with revenue themselves if they want. The fact is that the employee had a taxable benefit that they didn't pay tax on. The tax liability is the employees, not the employers. If the employer pays the liability, they are entitled to recoup the money. I know it's annoying but the BIK on a company car is not insignificant. I am not sure how someone would not notice it. I know I would on my payslip!!
I think you misunderstand my point on the “who pays Revenue” point, as I believe it is quite important. Revenue won’t address this issue by way of assessment on the employee. They’ll go to the employer, mainly because it is the employer who has the fiduciary responsibility to deduct and remit the tax, and it was their error, not the employee's, but also because that is how the relevant legislation prescribes it.

Section 985 TCA 1997 provides the basic PAYE obligation on an employer to deduct tax on the payment of emoluments.
Section 985A TCA 1997 provides for the application of the PAYE system to perquisites / BIK.
Section 986 TCA 1997 provides for the making of regulations inter alia "for rendering persons who are required to make any such deduction or repayment, in the case of a deduction (whether or not made), accountable for the amount of the tax and liable to pay that amount to the Revenue Commissioners".

Regulation 28 of the now revoked PAYE Regulations (Income Tax (Employments) (Consolidated) Regulations, 2001 [S.I. No. 559 of 2001]) provides that:
"Within 14 days from the end of every income tax month the employer shall remit to the Collector-General the total of -
(a) all amounts of tax which the employer was liable under these regulations to deduct from emoluments paid by the employer during that income tax month..."


I could continue to quote more provisions and Regs, but the bottom line is that the employer is on the hook for the liability in the first instance.

There is provision for the employee to be assessed on the BIK as emoluments, and for the tax borne by the employer (to the extent that it hasn't been made good to them by the employee), to be treated as a further emolument of the employee, but I have never seen this applied in reality.

After all of that, it is a legal matter as to whether the employer has recourse to the employee for the tax - I don't know the answer to that. The OP says they drew attention to the matter and were told that BIK was being deducted, so (at risk of straying beyond my sphere of competence) would they not have a legitimate expectation that the matter was being properly addressed by payroll..?
 

Cece2017

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3
I think you misunderstand my point on the “who pays Revenue” point, as I believe it is quite important. Revenue won’t address this issue by way of assessment on the employee. They’ll go to the employer, mainly because it is the employer who has the fiduciary responsibility to deduct and remit the tax, and it was their error, not the employee's, but also because that is how the relevant legislation prescribes it.

Section 985 TCA 1997 provides the basic PAYE obligation on an employer to deduct tax on the payment of emoluments.
Section 985A TCA 1997 provides for the application of the PAYE system to perquisites / BIK.
Section 986 TCA 1997 provides for the making of regulations inter alia "for rendering persons who are required to make any such deduction or repayment, in the case of a deduction (whether or not made), accountable for the amount of the tax and liable to pay that amount to the Revenue Commissioners".

Regulation 28 of the now revoked PAYE Regulations (Income Tax (Employments) (Consolidated) Regulations, 2001 [S.I. No. 559 of 2001]) provides that:
"Within 14 days from the end of every income tax month the employer shall remit to the Collector-General the total of -
(a) all amounts of tax which the employer was liable under these regulations to deduct from emoluments paid by the employer during that income tax month..."


I could continue to quote more provisions and Regs, but the bottom line is that the employer is on the hook for the liability in the first instance.

There is provision for the employee to be assessed on the BIK as emoluments, and for the tax borne by the employer (to the extent that it hasn't been made good to them by the employee), to be treated as a further emolument of the employee, but I have never seen this applied in reality.

After all of that, it is a legal matter as to whether the employer has recourse to the employee for the tax - I don't know the answer to that. The OP says they drew attention to the matter and were told that BIK was being deducted, so (at risk of straying beyond my sphere of competence) would they not have a legitimate expectation that the matter was being properly addressed by payroll..?
Amazing , this is great information. Thank you , appreciate you taking the time to reply!
 

Coldwarrior

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150
My father had a similar situation to the OP's years ago with his employer not correctly(or not at all) charging the BIK tax to employees with company cars, I don't know the exact details but I believe in the end it was the company that paid Revenue back.
 

Sunny

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3,550
Arguably the most dangerous thing on AAM. A completely wrong piece of advice delivered stridently and with absolute conviction.

torblednam is correct.
It's not wrong. The company can pay revenue but they are perfectly entitled to recoup the money from the employee. If you don' think that is the case, you are completely wrong. I can also prove it. I had the exact same issue with BIK on VHI subscriptions paid by my employer. I can give you the correspondence I had with Revenue and an employment law solicitor if you like. It was my taxable benefit. My company could pay the backdated tax on it but they were perfectly entitled to ask me for it as I had been overpaid. Maybe the OP's employer won't ask but they are entitled to. So next time, you want to make personal attacks, go back to your original thinking and ignore my posts like you said you would do on other thread. I am tired of your ignorant know it all attitude where anyone else that might disagree with you is dangerous or stupid.

Actually don't worry about it. I am finished with AAM. Enjoy.
 
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