HMRC underpayment demand

[Legseleven]

I received two demands today for tax underpayment, 2008/9 and 2009/10. The total is aproximately £5000 - just in time for Christmas! Same employer for the past 10 years, same pension, etc., all PAYE. I have had no change in circumstances, no income from shares, etc.

Has anyone any advice about how I should handle this? I am now retired, with a correspondingly significant drop in income?

I did a bit of research and the HMRC website seems to say that it is the responsibility of the individual to see that he/she is paying the correct amount of tax - how on earth is Joe Bloggs supposed to do this?

I'd be grateful for any guidance.

Thanks.

[Count-A-Strong]

Looks like you've been unlucky as the amount is at the upper end of the 'average' scale.

In some cases, HMRC will consider writing off demands where taxpayers can demonstrate that they provided all the information necessary to calculate their tax correctly. You can dispute extra tax charges by claiming on a ESC19 form proving that you have supplied information in good faith and retrospective bills should be dropped, but it depends on the reason for the underpayment.

You first need to check that the HMRC's new calculation matches the information on your P60 for the particular year.

if it can be proven thet the HMRC did not act in a timely fashion, then you can apply for an Extra Statutory Concession via the aforementioned form.

The Low Income Tax reform group have been fighting the 'little mans' corner and there may be more info on their website:
http://www.litrg.org.uk/

[themas]

I don't understand. Are you saying you were employed, paid tax though PAYE and (most important) had no other source of income in the tax years concerned? If so, it is very difficult to see how such an underpayment arose.

However, if you did have other income (e.g. a second job, income from renting out a property, a pension etc.) & did not declare it to HMRC then the underpayment has presumably arisen from that. (Most of these cases come from a second income of some kind.)

Certainly, you must check HMRC's calculations in detail to satisfy yourself they are correct, & follow the advice in the previous post.

[Legseleven]

Hi, both
Thank you for your replies.To elaborate: I worked until aged 68 ( PAYE), at a final salary JUST above the 40,000 threshold, and had a reduced personal allowance.

I had a widow's pension and another from my late husband's superannuation scheme (40% taxed).

Count's link (thank you for this!) seems to show that HMRC has lumped my husband's pension income with my PAYE salary. Woud that make sense, as the sum called 'PAYE income' seems to be the total of the two?

Thanks again - I would be glad to supply any further details that might help.

[Legseleven]

Just to add to the above information, HMRC had full knowledge of all my income!

[Count-A-Strong]

Challenge them legseleven. Do you know anyone who is An accountant or someone who runs their own business who employs an accountant, who could help you?

[Legseleven]

Thank you both
I have gathered ALL correspondence from HMRC, including P60s, for the past two financial years, including one serious mistake in coding on their part in October 2009, when they decided to tax all my PAYE salary at 40%.
I intend to photocopy each one and ask for a detailed explanation of each.
Is this a reasonable start to my response?
I would be really glad to hear what you think.
Many thanks