Tax Man Nightmare

[san070160]

Some time ago, I received a letter from the Inland Revenue claiming that I owed £65 due to an underpayment. However, I only work part time and haven't earned enough to pay tax for years now. I explained this to them and for some reason they sent me a Self Assessment Form. I rang them and offered to pay the money over the phone, even though I didn't agree that I owed it, but they said it was too late and I had to post them the Self Assessment Form. I did this, but en they said I hadn't completed the form and I now owe them £1200 for the Late Payment! And if I don't pay within 30 days, it'll go up even more! How can this be possible? Has this happened to anyone else? And what the Hell can I do? I certainly can't pay it.

[fiction-factory]

I think we need to know what reason as given for the underpayment and whether you have ever been part of self-assessment or had any other income that should have been declared.
A phone call to HMRC seems to be the next step

[VHG]

Not a scam is it.

Are you SURE you are talking to the Inland Revenue?

Sounds a bit extreme doing a scam just for £1200, but if you can collect that off lots of people it soon mounts up.

[ubasses]

Get all your P60's together along with any tax certificates for tax paid on interest received, and any other paperwork relating to income and tax. Take the whole lot along to your Citizens Advice, they will have someone there who will be able to help. And, I believe, access to telephone numbers you will not be able to find. Might be best to ring first to make sure the correct person is in the ofice

[fiction-factory]

Was it definitely a letter and not an email?
To be genuine a letter would have been from HMRC rather than "inland revenue"

[New Judge]

Very roughly, what was your income (including everything, employment, interest, pensions) for the year in question?

[fiction-factory]

Do you have a pension to supplement your income? Did the letter say anything about what the underpayment related to?
I can understand your concern and think you need to ask HMRC for a proper explanation.

[Dogsbody2]

Late filing penalties rack up pretty quickly. £100 for just being late. Then £10 per day if you file late by more than a month, to a maximum of £900, then another £300 if one has still done nothing after six months. So £1200 is perfectly feasible.

Your best bet is to follow ubasses advice and trust you can demonstrate it was all a big mistake.

[Buenchico]

Question 1: Did you have any income which wasn't taxed at source during the tax year 2013-2014? (It doesn't matter how low it was. Even being paid for a couple of hour's baby-sitting for a friend can count - although, of course, HMRC is highly unlikely to find out about really trivial things like that!).

If your answer is 'Yes', then you need to answer Question 2:
Did you submit a paper tax return by 31 October 2014, or an online one by 31 January 2015?

If your answer is 'No' then then the explanation for the penalties which you're now facing seems obvious. If you have untaxed earnings (however low) you MUST
(a) register for self-assessment ; and
(b) submit a tax return each year.

If you fail to submit your return by the relevant date you automatically get hit with a £100 penalty on the following day. So, if you failed to submit an online return by 31 January 2015, you automatically had a £100 bill to pay on 1st February. (It's completely irrelevant as to whether you owed any tax or even if HMRC actually owed you money at that point. If you didn't send a tax return in, you have to pay the penalty).

After three months (i.e. from 1st May) additional charges of £10 per day are applied for the next 90 days. (So you'd then owe a total of £1000).

Additional penalties are levied further down the line, so it's not hard to see where your big bill has come from.

More information here (together with some possible courses of action):
http://taxaid.org.uk/guides/taxpayers/tax-returns/late-filing-penalties-and-appeals