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Letters will be dropping onto around 1.2 million doormats over the next three months warning people they have underpaid their tax, with the average amount owed expected to be £550. Leading Peterborough accountancy firm Rawlinsons, based in Lincoln Road, is now keen to reassure people they won’t be required to pay the amount owing as a lump sum. Instead HMRC will, in most cases, recover the debt by altering the tax paid in the next financial year.
The annual review of tax payments saw HMRC refunding an average of £340 to around 3.5 million tax payers who had overpaid in the year to April 2011. That process was completed at the end of September and the government will now begin contacting those who have underpaid. Form P800s will be sent to those people affected and tax codes for the year 2012-2013 reduced accordingly.
“This is part of HMRC’s regular conciliation of UK taxpayers’ PAYE records,” explained Rawlinsons partner Ken Craig. “While any overpayment is refunded, underpayments are generally collected by changing the relevant tax code for the...
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Source: CCR Magazine - Tax underpayment letters due warns city accountants
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About 3.5 million taxpayers will receive a tax rebate in the next few weeks, averaging £379 each, for the 2011-12 tax year. Another 1.6 million people will be told they have underpaid and now have to pay on average £537 each. HM Revenue & Customs said the letters were due to its annual reconciliation of peoples' PAYE tax codes against their final earnings and tax payments. This year the letters are going out two months early, HMRC said.
"We are pleased that we are able to start this process more quickly than in previous years, giving money back to those we owe and delivering certainty to those with something to pay," said Stephen Banyard of HMRC. Similar exercises have been controversial since the introduction of a new PAYE computer system in 2010. This revealed the need for extra tax adjustments which had been overlooked by the previous manual systems. Eventually they affected 22 million people, going back as far as 2004-05. Last year, the normal reconciliation exercise saw nearly five million people being told they had either overpaid or underpaid tax in 2010-11. HMRC explained that the main reason for people having to pay more, or being sent a refund, was that their circumstances had changed during the course of the year....Read more here: Tax rebates soon for 3.5 million
Taxpayers may no longer be able to appeal against shock tax bills by claiming they had no reasonable way of knowing they were paying too little. HM Revenue & Customs is planning to rewrite the controversial rule that has let 41,766 people in the past year have income tax and National Insurance underpayments worth £54million written off. The Extra-Statutory Concession A19 currently allows underpaid tax to be cancelled if taxpayers had a reasonable belief they had paid the right amount. But in the future HMRC wants to impose a stiffer test on taxpayers. It makes them responsible for checking their tax code, and notifying the taxman of any changes in their circumstances....Read more here: Taxpayers will no longer have shock tax bills written off under Extra-Statutory Concession A19 rule