HM Revenue & Customs would have you believe that ‘tax doesn’t have to be taxing’ yet six million taxpayers across the UK could be facing a revised tax bill because of an error with its PAYE system.
HMRC are now trying to recover £2 billion in underpayments, whilst repaying £1.8 billion in overpayments, so in a nutshell, some people will be faced with a tax bill while others will be handed a rebate.(is there a news feed on this we can link to? Here?)
The error was created when HMRC introduced a new computer system which brought to light “some discrepancies in our existing records,” HMRC said.
The news has caused a media storm but if you’re one of the six million about to find a letter on your doormat from the taxman – this could happen between now and January 2011 - the main advice is do not panic.
What to do
If HMRC believe you have paid the wrong amount of tax you will be sent a letter including a Tax Calculation form called a P800. This will tell you if you have paid too much or too little tax between tax years 2008-09 and 2009-10.
If you do receive this letter, the main advice is to read it carefully and check the calculations.
If you agree with the calculation then you do not need to do anything. Money will be either automatically repaid or deducted from your salary over the 2011-2012 tax year, providing the amount owed either to you or by you is under £2,000. You can even ask to pay it back over a longer period of time if you need to.
If you owe more than £2,000, HMRC may ask for it back as a lump sum – but there will be an opportunity to break up this amount into monthly instalments.
What if I disagree with my calculation?
If you don’t agree with something included in the calculation, you should contact HMRC on 0845 3000 627 or in writing to the address shown on your P800 letter.
In some cases, the amount owed may be written off by HMRC. This will only be considered if you can show that the taxman was provided with all the information necessary to get your tax right and you could have reasonably expected your tax deductions to be correct. In these circumstances you will need to contact HMRC and ask for the underpayment to be reviewed on that basis – something known as an Extra Statutory Concession.
More information about what to do and who to contact if you receive a P800 can be found at the Citizen Advice Bureau or by visiting HM Revenue & Customs. For detailed information, visit its ‘Understanding and checking your P800 tax calculation’ page.
