Inland Revenue is chasing my friend. What should she do?

big-saver_2

A friend spent 8 months in the UK on a working holiday visa in 2008.

She has been trying reclaim her overpaid tax (she paid tax on PAYE and only worked a few months so was due a large refund). But now the Inland Revenue are chasing her for even more tax!

What should she do?

This is what she emailed to me...

Hi,
Sorry to be bothering you, I really need your advice with tax repayment. I just got a tax calculation letter from HMRC saying that I have underpaid tax of £883.80. I was pretty upset about it since I havent even got back my tax refund.

So the story goes when I first applied for my tax refund in December 2009 I think, a few months later I received the 1st cheque but the name was spelled wrongly, so I briefly scribbled the 1st letter to request for another cheque (which I didn't keep a copy) and I am
so regretting I should have kept every details of it. Then i received the 2nd cheque around July, but again name was spelled wrongly, so I wrote a 2nd letter and sent to them about 4weeks ago.

The attachments I have included are the tax calculation form, my NI card number is in the tax letter, which I took photos of it, hopefully you are able to see them, and also my 3rd letter which I kept a copy. Apologies for the big file size as I took photos of it.

I saw an article about HMRC tax investigations and I am worried that I might have underpaid tax.

Could you help me out? If you need any other information please drop me back an email.

Thank you so so much in advance, and sorry for taking up your time.

KiKi

Hi there

You will need to post:

Her total earnings whilst she was here (assume it was all in one financial year?)
The total tax she paid
Total NI contributions made
Her tax code

This information should be on her P45. Then someone will be able to work out whether HMRC are correct or not in demanding extra tax. It's unlikely she was a victim of the 'underpaid tax' unless she had benefits in kind or other circumstances which she did not advise HMRC at the time but has told them since.

Obviously don't post the documents, but if you can post the information then someone can do the calculations for you - the best course of action will depend on whether HMRC are correct or not!

Cheers
KiKi

Gertie_Walker

Agree with Kiki - also can she say how much these cheques were for?
She is not being investigated - her case does not warrent this. There is probably a mix up due to wrong name spellings, etc.

clairec79

She said she wrote letters telling them the cheque was wrong requesting a correctly named one but didn't say she returned the incorrectly made out cheques - could that be the problem?

big-saver_2

Thank you!

I have asked her how much the cheques were for and whether she returned the cheques to HMRC. I will paste her reply here.

She earned £13,731 in 2008-2009 and £5,580 in 2009-2010.

I have cropped the documents to hide her identity. Here are the documents:

Gertie_Walker

Well, the calculations based on the figures given are correct, but I am mystified to know how she could have underpaid in 08-09 if she was on PAYE! Is she able to confirm that the figures shown for pay and tax for that year are correct (from her P60)?
They are saying they have already repaid £667.40 for 09-10 - is this the cheque which was wrong? If so, she needs to contact them and say that she returned the cheque (or didnt cash it). They can check for this.

Hammyman

Whoops. Your friend has seriously underpaid in 08-09 hence there is the £883 still owing from 08-09 which has been added onto 09-10.

She needs to sort this straight away. Inland Revenue do not stop chasing and they have a track record of whacking on charges, interest and bankrupting people.

Two options are pay it or if she's in PAYE employment, ask the Inland Revenue if they can reclaim it through her tax code which should mean just over £15 a week being recovered.

big-saver_2

She says the cheque refunds were both for about £660+ and she returned the cheque both times. The last cheque she returned was around 4 Sept 2010 from Singapore by airmail so HMRC should have received it within 10 days. The letter regarding underpaid tax was sent to her by HMRC on 19 Sept 2010.

She is looking for her two P60s though she thinks she sent one of them back to HMRC when she reclaimed her tax and does not have a copy.

Gertie_Walker

Hammyman is being alarmist - the taxpayer is abroad and HMRC wouldnt make her bankrupt.
She needs to check these figures first and foremost and secondly ask HMRC to check whether the cheques were in fact cashed as she returned them.

Hammyman

Gertie_Walker wrote: »

Hammyman is being alarmist - the taxpayer is abroad and HMRC wouldnt make her bankrupt.
She needs to check these figures first and foremost and secondly ask HMRC to check whether the cheques were in fact cashed as she returned them.

HMRC frequently do make people bankrupt for not paying their bills.

big-saver_2

Thanks everyone for your help.

Here is a copy of her P60 for the year ending 5 April 2009: