The Low Incomes Tax Reform Group have issued a comprehensive guide to enable taxpayers who receive letters from HMRC informing them they have underpaid or overpaid tax in the 2011-12 tax year to check their calculations and take action, where appropriate.
In the middle of May, HMRC started sending out the first PAYE calculations for 2011-12, some of which will now have hit taxpayers' doormats and could be causing concern.
Last year, HMRC started their annual reconciliation of PAYE taxpayers' affairs by sending out refunds, then moved on later to notifying those they believed had not paid enough tax. But this year, the underpayment and overpayment calculations are being dealt with together.
Anyone who receives one, be it a refund or a notification that HMRC believe extra tax is owed, should be proactive in checking it.
Examples of the letters taxpayers could write in response to receipt of a tax calculation
A guide to ESC A19, an Extra-Statutory Concession under which HMRC will sometimes write off arrears of tax
A guide to when HMRC should investigate whether someone's employer or pension payer should be asked to pay tax arrears rather than them
A guide to when someone can challenge an underpayment shown on a PAYE tax calculation where they feel HMRC have given them misleading or incorrect information or advice
Introducing the guide, LITRG's chairman, Anthony Thomas, said:
"People receiving tax calculations from HMRC should always check they are correct. In the last two years, LITRG's guidance has helped thousands of taxpayers to do just that, and to have underpayments written off, where appropriate. For 2011-12, most people being notified of underpaid tax will have to pay but there might be some instances where employers, pension providers or HMRC have made errors where there is a case for challenging the calculation.
"But the key message is that all calculations should be checked and action taken relevant to the individual circumstances, as taxpayers could be missing out on claims. If people do owe tax, they should investigate their payment options and those on low incomes should check whether it has any effect on their entitlement to means-tested benefits."
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