Charity issues guide to help taxpayers pay the right amount

The Low Incomes Tax Reform Group (LITRG) have reissued their guide for taxpayers who receive tax calculation letters from HMRC. HMRC gave notice today that they have started the ‘reconciliation process’ of sending letters over the next four months to employed taxpayers and pensioners who have either overpaid or underpaid tax in the 2014-15 tax year.

Employees and pensioners have tax taken off them throughout the year via Pay As You Earn (PAYE). In most cases, this means they pay the correct tax by the end of the year; but not always. LITRG’s guide explains what to do if HMRC send you a tax calculation (a ‘P800’) for 2014-15. This includes pointing out ways a taxpayer may be able to reduce their tax bill or have it set aside altogether in some cases.

Anthony Thomas, Chairman of the Low Incomes Tax Reform Group, said:

“Large numbers of reconciliation letters are issued each year and while most of them are correct, many have discrepancies that can be due to mistakes made by the employer or pension provider, or HMRC. Sometimes when that happens the taxpayer will be able to have the tax due written off or reduced, but this can take considerable time to sort out. If you think that it was an error by HMRC or your employer or pension provider that caused the tax underpayment, we suggest you make no payment of tax until the issue is fully resolved.

“You should contact HMRC and query the figures as a matter of urgency if you are not sure they are correct. Make sure you understand how any tax underpayment has arisen – and, if necessary, ask HMRC to take action to ensure the problem does not repeat itself.

“Where paying the tax will cause you hardship, we also recommend you contact HMRC as soon as possible so that you can negotiate a payment plan.

“Always remember to take a note of the date and time of any call made to HMRC so that your call may be traced, if necessary.”

Notes to editors

1.       LITRG’s guide can be accessed here

2.       HMRC’s announcement of the start of the reconciliation process for 2014-15 was posted here earlier today. It states that the process should be completed in October.