Tax office suddenly claiming "Tax owed from previous year..."

JennyP

This has happened to both my mum (whose tax return I complete for her as she doesn't understand it!) and my boyfriend (who doesn't understand it either but won't let me do it!)
1. My mum paid all her tax last year - not much as she is a pensioner - and received a statement back saying that I'd done it wrong and she was given some money back. Then this year, the PAYE coding notice came through with a line saying that they need to collect £60 because of tax owing from a previous year. How can she receive a refund one minute for overpayment and then get asked to pay £60 that she's underpaid?
2. Boyfriend has similar case but it runs in the hundreds so is more serious. He received a refund of several hundred pounds as we'd overcalculated it. Then he suddenly received a bill for several hundred pounds (a different amount) saying that he had underpaid his tax. He rang the tax office but they could offer no satisfactory information and said that he had to pay it.
Surely, if they suddenly ask for more money when they said that they owed nothing, they should have to offer a satisfactory explanation for how they have calculated that. Otherwise, the tax office could just get loads of extra money out of people to help the government out of the current situation and none of us would be any the wiser!
What can be done about this?

fengirl_2

It's really hard to be helpful here without knowing actual years and amounts you are talking about, as well as the circumstances of this increase in tax. However, there is a theme running through this and thta is that self assessment calculations were amneded on the strength of information given and then more information seems to have come to light showing that the self assessments were incorrect. I think both taxpayers need to ask for an interview at their local tax offices to ask for a full explanation - it is not good enough for the person you spoke to to leave you not understanding the situation! I would never have let a taxpayer out of the door until they understood why something had happened.

JennyP

We didn't give them any further information though. And all the information we gave them was correct.
Surely they don't check your self-assessment and then go back to it at a later date? And no circumstances had changed in either case.

Mikeyorks

JennyP wrote: »

Surely they don't check your self-assessment and then go back to it at a later date?

Not quite ..... but they do process it initially on the strength of the information you provide. Then they go back and check later. The initial process can result in an apparent overpayment .... but which can be clawed back if you've given incorrect information / put net instead of gross anywhere etc.
Might seem a bit odd but it's founded on the principle you self-assess ..... therefore HMRC process it initially and then check later.

As fengirl says .... too little direct info to comment other than generally. Surely there is some sort of computation re the underpayments?

chriiiiiiiis

JennyP wrote: »

1. Then this year, the PAYE coding notice came through with a line saying that they need to collect £60 because of tax owing from a previous year. How can she receive a refund one minute for overpayment and then get asked to pay £60 that she's underpaid?

2.He rang the tax office but they could offer no satisfactory information and said that he had to pay it.

1. The £60 may not relate to 2007-08 (which is the tax return I'm assuming you've recently completed).

2. I find it hard to believe that they actually said that - Tell him to phone back.

JennyP

They've given no further information than that.
I filled in the 2006/07 tax returns for both my boyfriend and my mum and calculated their tax. I overcalculated in both cases and they both paid too much.
They both were given refunds. Then he was asked for several hundred back again as they said he had underpaid. At that point, he dealt with them so I don't know what was said but they didn't give any satisfactory explanation.
My mum got a notice of PAYE saying how much would be taken out of her pension to put her on the right tax code so that she was paying all her tax like that rather than in a lump sum. On the PAYE notice, it says that bit about the sum owing from a previous year. But there is no details about why or which year. I phoned them yesterday but until they have a letter from mum authorising me to discuss her affairs, they won't tell me about it. No circumstances have changed and neither return is particularly complicated. Mum's is literally a bit of savings interest, her pension and a very small amount of income from a rental house she inherited. She doesn't make loads of deductions for expenses on the rental house - just one for the insurance payment. Nothing much changes year on year either. I just think it's odd that they don't have to tell you which tax year and why the money is owing.

toby_puppy

I would ring the tax office and ask them for forms SA302's for the past 3 years or so. This is the actual tax calculation they are supposed to send you, which you can check to your tax returns, assuming you kept copies.

On page 2 of the form it will show all the income you entered on your tax returns and any tax deducted at source - such as PAYE tax, tax on savings etc.

It doesn't show the actual cheque payments you sent them but obviously you would have details of those anyway.

I think this is the best way of ascertaining which tax year the underpayment relates to.

toby_puppy

chriiiiiiiis wrote: »

2. I find it hard to believe that they actually said that - Tell him to phone back.

totally agree - you can always ask to speak to a supervisor if you are not happy with the response.

toby_puppy

jostenning wrote: »

I would ring the tax office and ask them for forms SA302's for the past 3 years or so. This is the actual tax calculation they are supposed to send you, which you can check to your tax returns, assuming you kept copies.

On page 2 of the form it will show all the income you entered on your tax returns and any tax deducted at source - such as PAYE tax, tax on savings etc.

It doesn't show the actual cheque payments you sent them but obviously you would have details of those anyway.

I think this is the best way of ascertaining which tax year the underpayment relates to.

btw, they are supposed to send you SA302's after processing your tax returns, but working in an accountants I know that they don't always do so - sometimes we have to ring to request them for some clients.