Underpaid tax-will the taxman go back more than last 2 years in due course?

johnsmi

Hi there,

after getting the dreaded letter for £2100 underpayment for the last 2 years (as other have got) I haver rang the HMRC but seems I will have to pay the amount demanded as all the figures are correct. Im on an occupational pension and taxable Incapacity benefit, total about £13200 per year

What I'm a bit worried about is in due course the taxman will go back further years prior to 08. I did quickly run this past the HMRC person but they said that at the moment my tax affairs are "balanced" whatever that means, but did not totally rule going back further years as he said its the computer who calculated the tax.

As I have been in my pressent income situation from 1997 (I have always been on paye) and probably owe tax for those years too, do you think they might actually go back that far?

Thanks for any advice.

john

Mikeyorks

With allegedly more than 1M people underpaid for one or more of the 2 years the new PAYE system has been set up to reconcile - and with HMRC set to lose 25% of budget in the spending Review ............ I personally doubt they will be going back over other than extreme cases?

From the outside looking in - the new system is only set up to reconcile 08-09 as the earliest year. Anything else will need to be picked up manually. Whilst that can be done from exception lists or similar. They will 'risk assess' cases - and I doubt your average £1k puts you in the firing line for an exceptional review.

If you've been over the figures with them - what aspect is it that's given rise to the underpayments?

johnsmi

Thanks for reply. Well it seems I have paid little or no tax atall, and both my occupational pension provider and also the department of works and pensions who I get the taxable incapacity benefit from have both given me the full personal tax allowance for each year, hence the underpayments for each year.

I think this mistake goes back to 1997 so I will have an underpayment for each year back to that period. The HMRC did have all the details my name and address etc but it seems its only now since the new computer system has been installed that it has showen up.

Hoping that they won't want back tax for all these years as it could well add up to over 10k but I suppose if they do decide to go back that far I will just have to pay up. I would imagine that there are probably other people in the same situation as me.

John

Mikeyorks

It does seem to be that a lot of people with either 2 x jobs or income streams have been totally unlinked in the old system - but now brought together.

But it doesn't change what I said earlier - I think you're below the parapet for a more in depth look.

jennifernil

Is there no responsibility on the part of the taxpayer to check that they are not getting their allowance twice?

It does seem rather unfair on those who have been paying all their tax correctly.

Coding notices do have a leaflet explaining about allowances, so it is not difficult to ascertain the correct figures.

Plenty of info on the HMRC website too.

Tarasam

Thank you Jennifer, I completely agree. Why should ignorance be an excuse to not pay tax, when the majority of us go out to work, work hard and pay our dues. If you turn a blind eye to these matters they will come back and bite you. I have very little sympathy.

chrismac1

I disagree. For a start there is the coding system itself - 647L for example. How stupid is that?

647 is utterly meaningless unless you know that by multiplying this number by 10 and adding 5 you arrive at the tax-free allowances for the year. Fine.

SO WHAT IS SO HARD ABOUT JUST MAKING THE TAX CODE 6,475? !!!!!

Then you wouldn't need all the explanation notices, written by tax employees in a style guaranteed to alienate 80% of taxpayers. Everyone would know that their tax code = their personal allowances.

Bear in mind also that many people with 2 jobs - 100% of those within the various payrolls I process for clients - are either teenagers or in their early 20s. How exactly are these folks supposed to learn about the UK tax system at that age - by a process of osmosis? Because although the school curriculum has its fair share of silly drivel built in, whenever I ask folk if they are taught any of this stuff in school the answer is always no. And every time I am running over someone's P46 check box, I ask if this is new to them or they already knew. Virtually always the answer is that this is the first time in their lives anyone ever explained their PAYE coding to them.

jennifernil

They could make an effort to find out, there is plenty of information out there.

Tarasam

jennifernil wrote: »

They could make an effort to find out, there is plenty of information out there.

Exactly, there are too many lazy people about and too many wanting everything done for them. Didnt we all leave school/college/uni without a knowledge of tax but some of us made the effort to educate ourselves in regards to finance, tax etc.

System

kellyshay wrote: »

Exactly, there are too many lazy people about and too many wanting everything done for them. Didnt we all leave school/college/uni without a knowledge of tax but some of us made the effort to educate ourselves in regards to finance, tax etc.

Personally, one thing I've never been accused of is being lazy.
But, the only reason I wanted, or had to learn about all this tax drivel is because the various people responsible for taking my hard earned money off me in the form of taxes could not be trusted to do it correctly.

Having said that, I agree everyone needs a basic understanding of finance.

Just_landed

Thank you Jennifer, I completely agree. Why should ignorance be an excuse to not pay tax, when the majority of us go out to work, work hard and pay our dues. If you turn a blind eye to these matters they will come back and bite you. I have very little sympathy.>>>>>>>

The tax is so complicated to work out, may be thats why a lot of people bury their heads in the sand. Not everyone is good with numbers.