Unexpected tax demands have been received by many people – lately as a result of HMRC’s new computer system that has automatically reviewed taxpayer’s affairs and picked up liability from earlier years.
Mainly these arise from tax codings not being checked for accuracy and errors in codings being carried forward for years. One client had a £50,000 Gift Aid allowance incorrectly given in her code for 2012/13 which, had we not intervened, would have created a £25,000 tax underpayment.
Often this can be as a result of HMRC not previously linking together information supplied by you or your employer about your tax affairs. Possibly your employer has notified HMRC that you are provided with benefits or reimbursed expenses but HMRC have not taken this into account in your tax coding over several years thus creating an underpayment of tax.
Another frequent problem is when you have multiple sources of income and HMRC full personal allowances against each source thus giving you too many allowances in the tax year resulting in an underpayment of tax.
If you have taken steps to advise HMRC promptly when there has been a change in your circumstances and this has not been actioned by HMRC resulting in an underpayment of tax building up over several years it may be possible to have the tax debt set aside under the official error provisions. HMRC’s computer will not take such provisions into consideration and you can request that the matter is reviewed by HMRC.
Should you not feel confident to do this then we can help you make and approach to HMRC. We have successfully helped clients to challenge unexpected tax credit and income tax demands.
SBN Tax & Accounts Services Ltd 