Underpayment of tax

sda38

It turns out I've underpaid tax for the past couple of years. It amounts to £4K to £5K. I went to the local tax office to get help with filling in tax return forms for those years and by chance saw some notes on the computer. One of the comments, from the glimpse I got, was that they had stopped pursuing this amount from me as it was under a certain amount. It then showed that they had started again. Do they not bother pursuing certain amounts and as I saw it, can I use that in my argument that I needn't pay? I didn't underpay on purpose. They had all my details and I believe, as they are the experts and had all the information, I shouldn't now be burdened with this debt and its repayment. Thank you for any information or advice.

mulronie

It might help to share some more details, like what is the cause of the underpayment? Were you PAYE (if so how many jobs)? Or self employed? Did you forget (or "forget") to declare savings interest/dividends that pushed you over the basic rate level of tax?

I shouldn't now be burdened with this debt and its repayment

Sorry but the law is against you. You owe tax based on your income, subject to your particular personal allowance, valid deductions. HMRC can choose to pursue you for unpaid tax or not; they have chosen to. The only sure argument that "you needn't pay" would be to demonstrate that the tax liability doesn't exist.

System

It depends on what year that note was referring to. You have a right to query the note so just ask what it was referring to.
It might be for years prior to the current amount they are pursuing when the threshold for recovering underpayments was greater than usual due to the implementation of the new PAYE computer system.

You can only dispute the underpayment if you think HMRC had information provided by you or an employer /pension provider which they failed to use in a timely manner. Do a search on this site for ESC-A19. Or you think it was an error by an employer/pension provider.
The thing is, if you were normally PAYE, that you should have disputed it long before now rather than let it get to the stage where they put you into self-assessment.