Tax underpayment for the second year in a row

gavin_gray · 9 November 2011 at 3:14PM

Just recieved a letter from HMRC informing me that for the second tax year in a row I will have to repay an amount to them due to the fact they did not pick up on the fact a was underpaying.

I have two jobs, one as a factory worker that pays around 38k and the other as a retained firefighter that pays around 12k per annum. Despite the fact a phoned and wrote to HMRC when i had earned enough to warrant paying 40% tax they did nothing despite my requests to them to adjust my tax code.

This year I am repaying a tax underpayment from 09/10 of £1200 with a taxd code of k81???, and now i have had a letter for 11/12 saying a owe £2200, but fortunatately it says the £1200 i am paying this year is to be deducted.

I have stated an appeals procedure with HMRC due to the fact I made a real effort to pay the increased tax my phoning them on more than one occasion and wriiting to them.

Do i have any chance of appealing successfully? any tips very welcome.

Pennywise · 9 November 2011 at 4:27PM

I don't think you'll get far with this. HMRC are within timescales for advising you of an underpayment. It is very hard for them to get tax codes right for people with two jobs, neither of which are over the H/R threshold, but combined result in H/R tax. The PAYE system was never designed for these circumstances. To get the code right, they'd have to know exactly your gross earnings from each employment at the start of the tax year, so that they could manually calculate the tax due and manually amend your PAYE code accordingly. At best, they can only make their best attempt to get the code somewhere near right, but even then, if either of your employment incomes is higher or lower than forecast, then the code will end up to have been wrong. I've got quite a few clients in similar circumstances and is is a battle to get the tax codes somewhere near right so as to avoid large under/over payments arising, and I end up contacting HMRC 2 or 3 times per year as the employment incomes vary to try to keep the code near enough. Not sure what you're trying to achieve - you're no worse off than had they managed to get the right code and in fact are better off because you're paying the tax later than you would if they'd got the code right, so you're actually benefitting from any mistake they've made.