Unpaid tax – what should you do?

14th Sep 2010

Following the introduction of a new computer system by the taxman, millions of people in the UK will be receiving calculations from HM Revenue & Customs (HMRC) before Christmas showing underpaid tax. Here we explain your options if you are one of them.

You will receive a calculation if HMRC’s new computer system, which deals with PAYE taxpayers, calculates that you have not paid the correct tax for 2009/10 and/or 2008/09.
 
Firstly, do not ignore the calculation . You, or an agent on your behalf, will have to communicate with HMRC.
 
You may decide the calculation is correct and you are willing to pay the unpaid tax. Otherwise you will have to appeal.
 
You may want to argue that you or your employer have done nothing wrong. However, this argument does not hold sway with HMRC. You are meant to have checked that the PAYE codes issued to you by HMRC were correct, and that your employer was using the correct code in processing your net pay.
 
HMRC may have made a mistake in their calculation , in which case you should simply tell them.  Otherwise, if the calculation is actually correct, you can claim to have the tax written off under Extra-Statutory Concession A19. There is no limit to the amount of money which can be written off under this concession. You can not rely on A19 to avoid paying the tax. However, it may be worth a try!
 
The A19 concession states HMRC should back down if two circumstances apply:
  • The taxpayer 'could reasonably have believed that his or her   tax affairs were in order', and
  • The taxpayer was told of the discrepancy by HMRC more than a year after the end of the tax year that the taxpayer's information was provided to HMRC.

I do not think HMRC will back down easily – you may have a fight on your hands and HMRC is actually in quite a strong position in many cases.

If you do need help, or are not sure of your options, seek professional help.

 

Author: Emma Glover (emma.glover@rowlandsaccountants.co.uk)

« Back to Article List