PAYE highs and lows (September 2010)

posted 11 Sep 2010, 01:44 by Unknown user   [ updated 12 Aug 2015, 15:00 by Kevin McDaid ]
It has hit the headlines this week that 1.5 million taxpayers have underpaid income tax amounting to £2 billion due to incorrect PAYE  notices being issued by HMRC. At the same time, millions more taxpayers have overpaid tax reportedly amounting to £1.8 billion, but of course tax overpayments are less of a headline grabber than taxpayers having to cope with unexpected tax  liabilities.

For those who have overpaid they will receive a cheque from HMRC for an average sum of just over £400. For those who have underpaid the average amount is £1,428. If the underpayment is less than £2,000 HMRC will collect it via a restriction in next year’s PAYE code. For most this will mean that they will be over £100 per month worse off from April next year. However, for those who have underpayments exceeding £2,000 the current system will not accommodate such large sums and presumably HMRC will expect a direct payment (no announcement has yet been made, although a spokesperson has indicated they will act sensitively! The latest unconfirmed report [11 September 2010] is that HMRC will not allow anybody more than 3 months to pay off a liability exceeding £2,000 on the grounds that they must have plenty of money in the first place. And this is the HMRC that try to make out that all they want to be is fair - if you owe less than £2,000 they will start to collect it from you in April 2011 and spread over the next 12 months; however, if you owe more than £2,000 it must be paid off before Christmas.....Ebenezeer Scrooge springs to mind).

If you are one of the unfortunate ones who has underpaid I would suggest that you ask HMRC for a detailed explanation of how things went wrong.* I would also suggest that you refer to the Low Income Tax Reform Group  website 'Tax underpayments - warning for an excellent article for those affected.

I would also strongly suggest that you contact me because I have seen too many occasions when HMRC have got their calculations wrong by failing to give credit for pension contributions or such like. It may even be possible to take advantage of an Extra Statutory Concession which results in HMRC writing off tax underpayments in certain circumstances. The circumstances are that HMRC should have used the information provided within 12 months after the end of the tax year in which it is received. Details of the concession can be viewed at news item on HMRC's website.  
* A National Audit Office Report recently indicated that HMRC failed to answer 44 million telephone calls in January 2010. I have highlighted this because this even shocked me. As there are probably not even 44 million taxpayers in the UK this means that callers were repeatedly unable to get through. Fortunately, as a registered agent with HMRC, we have a dedicated helpline which is manned by more experienced HMRC staff who are more likely to be able to satisfactorily deal with the call. 
Therefore, I would suggest that if you are not getting through to HMRC or when you do you feel that you are being fobbed off, all is not lost. Please get in touch and I will get to the bottom of it:

Tel 01274 214979, Mob 07939 222437