Tax refund received. Worried about cashing cheque.

mattymoo

Just opened the days post and found a tax refund for £2400 enclosed - payable by cheque. Reason stated is incorrect coding of car fuel benefit in the 2005 / 2006 tax year.

I am on PAYE but despite being fairly inteligent, I have never managed to grasp the PAYE system. Had a quick look at my coding notices for the last 3 years (since joining new employer) and they all look okay. Car tax benefit, fuel benefit and private medical. Also an amount for underpayment in the 04/05 year because it took my employer a while to inform IR about my car.

It all looks okay and I have often thought I am paying too much tax but never sat down to wade through the calculations. I am worried about cashing the cheque and then 6 months later the revenue realises there is a mistake and I have to pay it back.

Would an accountant look at the tax records of someone on PAYE? How long would it take to review 3 years and how much would it cost?

Does anyone know of a website or Excel template where I could just input my wages, tax paid etc and double check the figures?

Thanks.

jem16

http://www.listentotaxman.com/

Hoddie_2

jem16 wrote: »

http://www.listentotaxman.com/

As good as this and similar calculators are, people should not rely on the information they provide. This particular one does not calculate National Insurance contributions correctly in every case, and neither is the information they give about age-related allowances completely correct either.

seven-day-weekend

Why don't you cash your cheque and then put it into a high interest account where it can earn interest?

Or ring the Tax Office and ask them to explain it; they are usually very helpful.

tyllwyd

Have you tried ringing the IR and asking to speak to someone about it?

I'd cash the cheque for now but not spend the money - if you wait too long and the cheque gets too old to cash, I don't know how likely the IR are to provide a replacement. And if they then ask for the money back, but you never cashed the cheque in the first place, you might get yourself into a complete muddle trying to explain.

WHA

Also there is the potential that if the money turns out due back to HMRC, they may charge interest based between the time they issued the cheque and the time it is repaid, their interest rate is higher than you would get in a High Street bank. Best to phone them and make sure it is right asap. At this early stage, I wouldn't pay for an accountant - give HMRC a ring - a different pair of eyes may explain either why it is right or confirm it is wrong.

scuba147

you'd be better off phoning to clarify, but i understand your position!

I've just recived a cheque for £1200 for overpaid NI contributions from 04/05 and haven't got a clue, but now it makes me wonder whether the years since have been correct!!!

scuba147

jimmo wrote: »

You are an employee, but do you come under Self Assessment?

If you have self assessed (made a Tax Return) for the year to which the repayment relates, you are responsible for the accuracy of the assessment. Even if you made the Return within the deadline for HMRC to do the calculation for you the assessment will have been made on your figures. In those circumstances if you cash the cheque you will be guilty of making a false Return and will be charged interest and a penalty for the false Return. The safer option will then be to return the cheque and ask for an explanation.

On the other hand if you are not subject to self assessment, and many employees are not, HMRC will have made the assessment based on reports made by your employer. The employer makes reports of your total pay and tax, and benefits on form P11D.

If your employer got it wrong, or if HMRC got it wrong, you will be in the clear so far as interest or penalties are concerned and if HMRC discover the mistake at any time in the next six years they will be able to correct the mistake and ask you, politely but firmly, to repay them the tax “over-repaid”. but I am pretty confident they cannot charge you interest. If you claim hardship (I received the rebate in good faith and have already spent it. I can’t afford to give you £2400 back now). You could well be able to persuade them to collect the over-repayment over 3 years by adjusting your coding, again interest free.

If you are in Self assessment or don’t like uncertainties return the cheque and ask them to look at it again. If you don’t mind a punt and are not in self assessment put the money in the best savings account available and wait to see what happens.

This sort of makes sense, however, i rang the NI office and it appears they didn't really have much of a clue about what was going on!!!

The lady i spoke with advised that i'd signed and sent my paperwork on 29th April 2007 (this sunday just gone) and that i had confirmed everything was correct and it was my fault for providing false information etc.

A small point i realised was if this was the case, the NI dept have been extremely efficient at sending me my chq coz today is the 2nd May 2007, although my chq was recieved on 28th April 07. so they must just issue chq's without any confirmation or signatures!!!!

Hhhmmmmmmm not sure about this one!!!!