Consumer rights: Burst pipe leaves floor in an expensive mess

Water damage from a washing machine puts a homeowner in a dilemma over repairs...What happens if your employer hasn't paid your tax and pension?

In November last year, a pipe burst at the back of the washing machine. There was no water to be seen so I didn't know about it until paint started peeling off the walls.

The plumber fixed the pipe and we called in a damp company. It said the water is lying under the tiles but above the damp-proof course and won't dry out unless we lift the floor and put dehumidifiers in. Our insurance company has offered us a sum of money that will cover relaying the floor in the area around the washing machine and the downstairs loo, but the floor is the same all through the ground floor of the house which is open plan. As the tiles are 10 years old we won't be able to match new ones with the existing ones so we'll end up with a patchy floor. Shouldn't they pay to have the whole of the ground floor retiled?

SC

Edinburgh

It all looks lovely until something goes wrong. Did you arrange your insurance through a broker? If so, ask for his or her help in negotiating the settlement. A survey last year showed that in many cases brokers persuaded insurers to increase the amount they offered. If you arranged the insurance directly, has the insurance company sent a loss adjuster out to see the situation for themselves? If not, that's the place to start. Ask for someone to come out to inspect the work that needs to be done. Some insurance companies will agree to pay for the whole of the floor to be replaced on the grounds that otherwise the look of the floor will be ruined; some will draw a line and agree to replace all the tiles up to that point – for example, where the kitchen meets the living area. It depends on the sums involved. Your insurance policy will have a clause that says you have to do what you can to mitigate the insurer's losses – ie keep the bill as low as possible – so it will be a matter of negotiation. You could try asking for a sum of money in full and final settlement of the claim and add the extra to it to get the rest of the floor retiled at the same time or perhaps look at the possibility of putting down a cheaper kind of floor.

The other thing to consider is whether the job can be done without lifting the tiles. I've talked to several builders about this and they say it might be possible to dry out the area and do all the necessary work without lifting the floor. However, the insurer would have to agree that you should go ahead and do it that way and the builders have warned that there's always a danger that the drying out might not be thorough enough and the damp could return in a year's time – at which point you couldn't make a second claim on your insurance. Whatever you do, don't just accept the first offer and give up; keep negotiating until you are sure that the pay-out is the very best you can get. Stay calm, polite and reasonable throughout!

***

I've just left a job after three years and while I've been there I had tax and national insurance deducted. But because the business has been struggling. (Our wages have been late sometimes and people have been laid off.) I think there's a possibility that the boss didn't pay these to the HM Revenue & Customs. How can I find out and how would that affect my pension? (I'm 57.) I'm worried about asking in case I end up having to pay the money which I can't afford.

PJ

Leicester

It's against the law for your employer to deduct national insurance and income tax from your pay and not pass them on HMRC. If HMRC investigates and finds that the employer has been trying to avoid paying, it can prosecute. If you colluded with your boss to avoid making the payments you could be prosecuted too, but from what you say that's not the case. The onus is on the employer to hand over the tax and national insurance, not you. If that hasn't happened, he or she will have to face the music not you. Your payslips – assuming you've been given those – will put you in the clear. I've talked to HMRC and been assured that if you are suspicious you should call it on 0845 302 1479 and you have nothing to worry about. It can check whether your boss has paid up, and if he has, that will be the end of the matter. However, HMRC did say it's better to call than not call – if it investigates at some time in the future and finds your boss is guilty and that you knew but said nothing, it may take a less than sympathetic view.

However, there may be a legitimate explanation for this. A lot of businesses have been having problems making the necessary payments to HMRC because of the economic situation and lack of cash. There is a business support service to help firms in that position and it could be that your boss has come to an arrangement with the service to make late payments under a temporary payment arrangement.

The problem for you is that by paying National Insurance Contributions (NICs) you build up your right not only to a state pension but also to job seeker's allowance (JSA). You have to have paid the correct contributions over the past two tax years to qualify for JSA. That might be the most immediate consideration if you're now unemployed. By registering at your Job Centre and claiming JSA you'll find out whether your fears are founded. The Job Centre will contact HMRC too if it thinks there is a problem.

On the pension front, if your boss hasn't been handing over your NICs there's a possibility that as a result you won't have paid enough to qualify for a full state pension. As you'll reach retirement age after 6 April 2010 you will need to have paid contributions for 30 years. Given your age it's highly likely you've already met that target, but if you aren't sure ask for a pension forecast. You can get it online, by phone or by post and you'll find out from it whether you need to top up your contributions to get your full pension. Go to www.direct.gov.uk or call 0845 3000 168 for more information. The HMRC Business Payment Support Service Helpline is on 0845 302 1435.

www.moneyagonyaunt.com

Do you need a financial makeover?

Write to Julian Knight at the Independent on Sunday, 2 Derry Street, London W8 5HF j.knight@independent.co.uk

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