PAYE Tax Errors
You may have seen the media coverage over the past few days about over and underpayments of tax. It has been widely reported that HMRC’s new PAYE computer has calculated that some six million people have underpaid £3 billion in PAYE.
HMRC are currently sending out letters to people if they believe that you have under or over-paid tax.
Most people have paid the right amount of tax and won’t get a letter so don’t worry if you don’t receive one.
If you do get a letter don’t panic, you have not been sent a demand it is a calculation.
If you have underpaid tax, you need to understand from where this underpayment has arisen. See if you can immediately understand the cause of the underpayment. Is it something which you expected or knew would be adjusted? Or has it come as a surprise?
Do not accept any figure on the calculation without checking that it tallies with your own information.
The P800 is only an estimated calculation and HMRC have left the computer to do the sums. Many of the problems that have arisen in the last year have been because the wrong data has got into their new PAYE computer system. It is quite conceivable that some of the figures included are totally mistaken or the allowances granted to you are similarly wrong.
The problem with tax is that you do not know what you don’t know, so nearly all PAYE taxpayers are reliant on HMRC getting it right. This is not helped by HMRC giving the PAYE taxpayer virtually no tax help or information through the post.
And due to the number of taxpayers who pay tax under PAYE, most are unrepresented by tax advisers.
If you are one these individuals we may be able to help you in challenging HMRC and potentially getting some or all of the underpayment written off.
Where you have overpaid tax and are due a refund you will still need to check that this is correct. You will face a tax penalty if you notice an error and do not point it out or if you fail to disclose any income and this results in a higher refund than would otherwise become entitled to.
Again we can help you check that your refund is correct.