Tax experts issue updated guide to underpaid tax letters

The Low Incomes Tax Reform Group (LITRG) have updated and reissued their guide on what people should do if they receive a tax calculation letter (form P800) from HM Revenue and Customs.

HMRC have now started sending out the main bulk of calculations to people who they think have overpaid or underpaid tax through PAYE during the last two tax years 2008/09 and 2009/10. Between now and Christmas they expect to send out some 1.4 million underpayment and over 4 million overpayment calculations.

The full guidance is available on LITRG's website at litrg.org.uk.

Introducing the guide, John Andrews OBE, Chairman of LITRG, said: "Just because HMRC send you a P800 calculation doesn't mean to say that the figures it shows are right, or that you have to repay any underpayment shown."

He went on to summarise the main points of LITRG's advice to taxpayers: "First, check the calculation to make sure it is correct, and if you find any errors, or are in doubt, contact HMRC.

"Next, if the statement shows you owe tax, consider whether you have to pay it back. It could be too late for HMRC to be entitled to assess it; or it could be down to your employer's or pension payer's error, in which case they (not you) are normally liable for any underpaid tax.

"Finally, consider whether HMRC ought to write off the tax under their concession A19, or under their complaints procedure.

"If all else fails, HMRC ought to be prepared to give you time to pay. It was, after all, their delay that caused the unpaid tax to mount up. But do take care in negotiating payment terms with HMRC as your entitlement to means-tested benefits could be affected."