Personal Tax Audit

mr_baz

Hi All,

Having a bit of a nightmare so bare with me! In short HMRC have decided that I owe them £2500 underpaid taxes dating back from 03-04 that I have to pay back in 07/08. I have a company car/fuel card, I got caught out years ago with underpaid tax and ever since have been careful with notifying HMRC with car changes and P11d values etc, so to say this bill is a surprise is an understatement. Basically as there is just so much involved with this (and I am not convinced it is accurate) I am considering an accountant reviewing my personal tax. Does anyone have any experience in this or what the likely cost would be?

Thanks in advance.

Baz

malcindebt

What has caused the underpayment?

Is the assessment from a self assessment or is it an informal calculation?

Mikeyorks

mr_baz wrote:

Does anyone have any experience in this or what the likely cost would be?

Less than £2500 ....... if you're right that the underpayment is suspicious.

But if you've been careful to advise of changes etc .... that implies you've a basic understanding of how the earlier underpayment arose .. and what you had to do to prevent a repeat performance. That knowledge ought to be basically enough to check out an assessment to at least the degree where you can see how a further u/p arose - or that HMRC are using the wrong figures.
If it's SA - generally easier as you can check back to what you input, and identify any departure.

If not - worth an accountant review (get a fixed price) - unless your review concludes HMRC are right

Hoddie_2

If the first underpayment you encountered was for the year 02/03, this 'new' one could simply be a continuation of the same problem. However, £2,500 is a large underpayment if your income is all taxed under PAYE, you certainly need to check the assessment to make sure you've not missed out on any expenses, Gift Aid or personal pension relief you were due.

Llyllyll

It's difficult to suggest anything without knowing what has caused the underpayment. Have you tried working out where their figures come from yourself? It'd be unfortunate to have to pay an accountant to simply find something that you could have found yourself by double checking figures and all sources of income etc.

mr_baz

Thanks for your replies everyone. Very stressful day!

I was SA until 02/03 (was SA for 3 or 4 years IIRC) then they concluded all was in order (albeit with a bit of an underpayment) but they were happy for me to no longer be SA.

After some head scratching and reading through their notes I can see where a large portion of this underpayment comes from. Its actually from 05/06.. I had two cars that year (both same make, model, engine, retail price, identical bar colour) the first P11d in Jan 06 covered both vehicles, 8 months for one vehicle and 4 months the other and is correct. It then seems that my company benefits administrator has sent in another p11d in August 06 (that appears to have figures for a whole tax year) and the HMRC has replaced the 4 month portion of my previous p11d with a whole tax year? Very confusing and interestingly I have not had a copy of that p11d as I usually would.

That would cover a large portion of that tax (maybe half) - if indeed I am correct (god i hope so). I still get this feeling that somethings not quite right.

Fortunatley I have 10 years worth of codings, calculations and payslip history so hopefully for better or worse I can get to the bottom of this. This is just getting so involved that unless a tax audit by an accountant is mega expensive then I think a professional audit is the only way to go. Additionally for me to pay my existing tax along with this £2.5k over the next 12 months is simply unrealistic, so problems on that front too 'if' this is correct.

Thanks again guys.

Baz

whatatwit

If you have all of your details, then I would suggest that you write out a history for each year, detailing your pay and tax with a list of cars and other benefits received for that year, providing dates of any changes.

Is your tax office local to you, could you ask to make an appointment and then go through everything with them.

I don't know if tax offices are still able to do this, but you could ask to have your records sent to your local office and go through it with them, if your office is miles away.

Maybe one of the posters on here who has a bit more up to date knowledge could advise you on this one.

ctm_2

Just write a letter to HMRC with the exact details of the vehicles you had in the year, so they can re do the caclulation using the correct benefit figures.

I think that at this stage it would be a waste of money paying an accountant to do it for you.

Hoddie_2

Additionally for me to pay my existing tax along with this £2.5k over the next 12 months is simply unrealistic, so problems on that front too 'if' this is correct.

Send a letter to your HMRC office requesting they collect the underpayment over 3 years. Explain that paying an extra £208 tax every month will cause you severe hardship, and that you would not be able to afford £104/month either (this would be over 2 years).

Do this whether you think the figure is correct or not, and sooner rather than later, as your 07/08 code will already be adjusted. Best to sort it before April or you will pay £208 extra on your first pay of the new tax year.

Debt_Free_Chick

mr_baz wrote:

Fortunatley I have 10 years worth of codings, calculations and payslip history so hopefully for better or worse I can get to the bottom of this. This is just getting so involved that unless a tax audit by an accountant is mega expensive then I think a professional audit is the only way to go.

For £25 you could download Taxcalc for 2005/2006 and complete the self assessment form. Once you've done that, Taxcalc will calculate your tax liability, so you can check what HMRC have done.

mr_baz

Thanks very much everyone, some really useful info.

I think that Hoddie is spot on, I'll right to HMRC stating that my tax coding will leave me with no cash! Following this I'm going to get my benefits administrator to confirm all p11ds and go visit nice Mr Taxman as fortunatley they are fairly local. That should be great fun

I'll update the thread as things go from worse to better hopefully!

Baz