Tax Underpayment

O

OrlaM

Guest
I submitted Med 1 forms in January last and heard nothing so at the end of July I rang the tax office. The guy couldn't understand why but my forms had been redirected to Self assessment. (I'm a PAYE worker) Anyway he processed the forms and told me I'd have the cheque in a couple of days.

Alas I got a balancing statement of tax underpaid of €2058. After a trawl through payslips, I discovered the problem: I switched jobs in September of that year, returning to the public sector. I was initially taxed on an emergency basis but when my P45 was received and the tax adjusted I was refunded a crazy amount at that time. Normally I'm quite prudent regarding tax affairs but this thread started by my submission of Med 1 forms and I was quite ill recovering from an oepration at the time.

The balancing statement on the P21 simply says : Please forward a cheque in settlement of the amount.

Annoyance and irritation aside at the crazy administration that led to this situation, I know I've to face the music and that it's my own responsibility etc etc

I know I have the option to negotiate a repayment scheme over several years. But I was wondering - Which is the better option - repaying in a lump sum that would really hurt and be done with it or reducing tax credits for 3 years? Any opinions greatly appreciated......

Many thanks,
Orla
 
OrlaM said:
I submitted Med 1 forms in January last and heard nothing so at the end of July I rang the tax office. The guy couldn't understand why but my forms had been redirected to Self assessment. (I'm a PAYE worker)
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Do you have any non PAYE income at all - including Employee Stock Option/Purchase plan income? That might explain why self assessment came into the picture.
I know I have the option to negotiate a repayment scheme over several years. But I was wondering - Which is the better option - repaying in a lump sum that would really hurt and be done with it or reducing tax credits for 3 years? Any opinions greatly appreciated......
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Much of a muchness as far as I can see. If paying the lump sum would be a problem for you then ask them to stagger it by adjusting your tax credits.
 
No no stock options. It made no sense whatsoever to the guy I was speaking to as to why my affairs were redirected to Self Assessment.

Regardin the payment option the reason I posted the question was that someone told me it made more financial sense to spread the payment plans as it hurts less as its like a non interest loan. Does this make sense?
 
If Revenue are not charging any penalty/interest when spreading it over a few tax years (and I don't think that they normally do) then you might be better off with that approach.
 
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