Underpaid Tax 2003/2004

Jellybean_2105

I have received a letter saying I have underpaid tax in 2004/2005 as my employer used the wrong tax code. With the difference being £483.70

Adding to this is an underpayment for the tax year 2003/2004 of £476.52

So I now owe a total of £960.52

I have tried speaking to them on the phone but I dont understand it all. Can they go back this far to reclaim tax? Is there a way I can easily check their calculations?

I am sure I have already paid back this amount as my tax code changed in 06/07 - 07/08 and I paid around £40 extra tax a month?

Any help appreciated, thanks.

Gas_Powered_Toothbrush

What's the date on the letter? 03/04 and 04/05 are both time-barred now. Though if the calculations were done before the years went out of date, you'll still have to pay.

And was this through PAYE or did you complete SA returns those years?

Jellybean_2105

I received the first letter showing I had underpaid tax a few weeks ago, I called them to query it and they have now sent another letter with all the details and dates.

Seems a bit much to be chasing it now, I asked why it wasn't picked up before but was told they are trying to get all accounts up to date? :S

This is through PAYE.

Thanks

CynicalScotsman

03/04 and 04/05 are both time-barred now

Tax is not time barred. The crown can ask for money however long ago a mistake was made wether its one year or 20 years.

Mikeyorks

CynicalScotsman wrote: »

Tax is not time barred.

Totally incorrect in the context of this thread.

These are the time constraints for reclaiming PAYE :

http://www.hmrc.gov.uk/incometax/overpaid-thro-job.htm#3

........... HMRC operate a mirror image policy for claims they may make. The 'open ended' timeframe during which HMRC may go back relates to evasion. Clearly not the case here

dori2o

Is it a calculation you have received or a letter advising these underpayments are to be collected via your tax code?

As far as I am aware, been off work so not sure if it is something new, there were some cases where the assessments were done on the old system within the time limits but the tax has never been collected via a restriction to the code, therefore these underpayments have simply carried forwards each year. In this case, as the assessments were done within the limits the tax is still due and can be collected via the tax code assuming there is sufficient incometo take the tax from.

What exactly did HMRC say, and when were the assessments done?

Jellybean_2105

I received the first letter to say id underpaid and they were going to send me a new tax code to collect all the money outstanding. I called up and spoke to someone and mentioned i thought it was wrong so she sent me a letter with all their calculations.

I'm just sure I went through all this between 06 - 08 where I paid extra tax, and in the end they sent me a rebate for £500 in 2008 as I had paid too much. Now they are saying I owe the money again.

Do I just have to accept that what they say is right?

Mikeyorks

Jellybean_2105 wrote: »

Do I just have to accept that what they say is right?

You can challenge it if you consider they have had the information giving rise to the underpayments for some time - and failed to act upon it. Look at ESC A19 by reading via here :-

http://www.hmrc.gov.uk/p800/paye-tax-calcs.htm

But - if they're going all that way back it does appear to be outside the usual pattern envisaged by the above link. You need to check back on the papers / calculations you will have from the 06-08 period you mention. And if 03-04 etc stems from the same source then I think (although I'm not a fan) you have a good case to ask them to review it in the light of ESC A19.

Jellybean_2105

I have just looked back over all my old letters from the previous time this happened. Its mentions I owe 960.52 the exact same amount as now. My tax code was changed for 06/07 & 07/08 as I agreed with them to pay the amount back over 2 years.

How can they now say I still owe the money, so confused

Mikeyorks

That sounds a little too co-incidental. As you've now picked up that extra detail - give them a ring.

But do check your Code numbers (you should have a P2 (Coding Notice) for each year?) and make sure that amount was coded out for each year. (At £480pa it should show as a reduction of around £2400 in your allowances (£2400 @ 20% = £480)

Which ..... (£480 / 12 = £40) comes pretty close to the £40pm extra you mentioned originally?

Jellybean_2105

Been on hold ten mins now *yawn*

I have the coding notice from 06/07 where there is a reduction of £2237.

My tax codes have changed from the following:
04/05 - 627H
05/06 - 422LM1
06/07 - 213L
07/08 - 232L
08/09 - 527L

Do they have to make it so complicated lol