Guidance for HMRC underpaid tax
Filed under: Tax
If you receive one – don't panic – there are simple steps to check HMRC calculations and challenge figures if you believe you have paid enough.
HMRC will start sending out the first PAYE calculations for 2010/11 in the next few days where they think that people have not paid enough tax in the year. This will continue up to Christmas and an estimated 1.2 million letters will be sent out in total, with an average of £600 owed in tax per person.
If you receive a letter saying you owe tax – don't automatically pay the sum without checking first, explains Kelly Sizer, Technical Officer at The Low Incomes Tax Reform Group (LITRG): "For 2010/11, there is less cause for optimism in obtaining a write-off. But calculations should still be checked and action taken relevant to the individual circumstances.
"If people do owe tax, they should investigate their payment options and those on low incomes should check whether it has any effect on their entitlement to means-tested benefits."
The LITRG has launched a comprehensive guide available online to those taxpayers who receive underpaid tax letters from HMRC about how take action, check their calculations and, where appropriate, challenge HMRC figures.
The guide includes step by step guidance and examples letters taxpayers can use to write in response to receipt of a tax calculation. There is also a guide to circumstances where HMRC will sometimes write off arrears of tax, and situations where HMRC should investigate whether your employer or pension payer should be asked to pay tax arrears rather than you.
It also includes details about when you can challenge an underpayment shown on a PAYE tax calculation where if you feel HMRC have given misleading or incorrect information or advice.