AN EMPLOYEE has told jurors how she had raised a problem with state contributions while working for a Hampshire couple accused of carrying out a near £1 million National Insurance and income tax fraud at a nursery.

Wendy Byrne was giving evidence in the trial of ex-husband and wife Michael and Marina Scott who are charged with offences taking place while running Pixies Day Nurseries in Locks Heath and Woolston between 2007 and 2011.

She told Southampton Crown Court how she had always assumed deductions for tax and National Insurance on her monthly payslips were paid to relevant departments.

However, she was contacted by HMRC several times from 2009 onwards about gaps in her National Insurance contributions for certain tax years, the court heard.

Mrs Byrne, who has worked at Pixies Day Nursery for 17 years and continues to, said she sent payslips back showing contributions and a reply confirmed that that tax year would count towards her pension.

Mrs Byrne, then working part-time, said she raised this with Michael Scott.

“He said it’s probably because I was not earning enough,” she said.

The prosecution alleges that National Insurance contributions and tax payments through Pay As You Earn (PAYE) were deducted from staff wages to a total value of more than £900,000.

It alleges that the defendants failed to file these returns in respect of the deductions being made.

The court has previously heard how staff had believed that they had been paying their tax contributions through PAYE.

But they had never received tax certificates and the Inland Revenue service was not aware that any payments had been made.

The court heard how Mrs Byrne, having received an email sent to staff in April 2012 from an employee working next door to the nursery saying his tax and National Insurance were not paid to HMRC and advising others to check their tax contributions, made enquiries.

She was then told that there were no records of any taxable income for three tax years.

That same month, an employee raised the tax situation and this email at a meeting the Scotts had called to explain their plans to sell the nursery, the court heard.

Mrs Byrne told how the employee had been “shouted down” by Michael Scott.

However, under cross examination from Charles Row, defending him, Mrs Byrne agreed that she thought others at the meeting had also told the employee to “pipe down”.

She also agreed that the “highly charged”, “emotional” meeting was not the appropriate setting to raise a particularly technical question.

She confirmed that Michael Scott had at that meeting asked all employees to send copies of their payslips to HMRC.

Mr Row added: “He said words to the effect that it was his understanding that the money [tax and National Insurance] had been paid but simply misallocated?” to which Mrs Byrne said “yes”.

Nigel Edwards, defending Marina Scott, asked “When it comes to the wages, nothing to do with Marina Scott”, to which she said “no” and agreed she was not good with computers.

The pair, both of Locks Road, Locks Heath, deny one charge each of fraud.

For Michael Scott, 63, this relates to National Insurance contributions and PAYE payments for staff.

For Marina Scott, 60, it relates to failing to disclose information that National Insurance contributions and PAYE payments for staff had not been accounted for.

The trial continues.