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Chapter Trading Ltd (TC4626)
The taxpayer a registered charity employed Y during 2010/11. After a change in Y’s PAYE code the tax due for week 26 was greater than the salary she was due to receive. In those circumstances the payroll system had been set up to deduct no tax from the employee’s pay. However it also generated an exception report stating “insufficient pay for tax”. As a result the taxpayer paid no tax for weeks 26 to 52.
HMRC sought to recover the tax from Y but she said the underpayment was the responsibility of her employer. HMRC agreed and issued a determination under regulation 72 of the Income Tax (PAYE) Regulations 2003/2682.
The charity appealed.
The First-tier Tribunal agreed with HMRC that the charity had not adequately investigated...
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