Do HMRC often get tax calculations (owe them money) wrong?

Nine_Lives

My mum had a letter the other day stating in August 2012 they sent her a P800 Tax Calculation for the year ending 5 April 2012. They say that my mum owes them tax of £394.70.

In short, she's never had a P800 form. We occasionally have issues with post 'not making' it to us. My brother didn't receive a letter from the courts either, which was sent out.

Thing is, she's on benefits. DLA & ICB. Since late 2011 she also started receiving about £300pm (net) in pension payments after my dad died. IIRC one of those benefits doesn't count towards your earnings, but the other does. I would've been surprised if this took her over the limit? Which is why i ask the question.

She'll have to call them tomorrow, but i just wondered if this is a common error or do they rarely ever get this sort of thing wrong?

CLAPTON

whether they are wrong or right she needs to check the full facts

phone HMRC and ask for a copy of the tax calculation

also she could post up the details on this site and people here could work out what her tax should be

chrismac1

I get at least two or three HMRC blunders every month across my client base of 120. most accountants will tell you the same story. If I were as slow, and made as many errors, I would have a client base of precisely zero.

bossymoo

In 2012 I had an incorrect tax code notice, it quoted my WPA as being double the amount it was. I called them and it had been inputted as a pension as well as a taxable benefit. They corrected it immediately and sent a new code. In 2013 they sent one with the exact same error. I'm now assuming it will just happen every year, they will wipe out my tax code, I will call them, and they will correct it.

I wouldn't mind but they seem ever so helpful when you eventually get through...

jimmo

DLA is non taxable.

http://www.hmrc.gov.uk/manuals/eimanual/EIM76100.htm


I don’t recognise ICB and, as far as I can tell it doesn’t appear in the link above or this link to taxable benefits.

http://www.hmrc.gov.uk/manuals/eimanual/eim76101.htm


However, to answer your question HMRC do get tax calculations wrong so it is well worth checking. Follow Clapton’s advice above, get a copy of the calculation and take it from there.

Being a former taxman myself I have had no problems with my own tax until I reached State Pension Age so, following advice seen on here, I phoned just after 8:00 am, got through to a human being and sorted my problem in a couple of minutes.

As it is your mum’s problem she will need to make the call herself or at least be on hand to answer the security questions.

agrinnall

Jimmo, I'd guess that ICB is actually Incapacity Benefit, which according to this link is taxable from the 29th week you get it.

https://www.gov.uk/taxable-income/state-benefits-that-are-taxable

zygurat789

Nine_Lives wrote: »

My mum had a letter the other day stating in August 2012 they sent her a P800 Tax Calculation for the year ending 5 April 2012. They say that my mum owes them tax of £394.70.

In short, she's never had a P800 form. We occasionally have issues with post 'not making' it to us. My brother didn't receive a letter from the courts either, which was sent out.

Thing is, she's on benefits. DLA & ICB. Since late 2011 she also started receiving about £300pm (net) in pension payments after my dad died. IIRC one of those benefits doesn't count towards your earnings, but the other does. I would've been surprised if this took her over the limit? Which is why i ask the question.

She'll have to call them tomorrow, but i just wondered if this is a common error or do they rarely ever get this sort of thing wrong?

Your mother's date of birth may also be relevant.

xylophone

https://www.gov.uk/taxable-income/state-benefits-that-are-taxable

Since late 2011 she also started receiving about £300pm (net) in pension payments after my dad died.

In the tax year 2011-12 did she receive any taxable bereavement benefits?


http://www.hmrc.gov.uk/rates/it.htm might be worth a look.

Nine_Lives

This is what she was sent:



http://s151.photobucket.com/user/Kev_83/media/Tax800001_zpsf3f2f77a.jpg.html

I didn't know bank interest counted as income? In the same manner say wages do.

agrinnall

Yes, bank interest is treated the same as any other source of income (and in this case has been taxed at 20% by the bank), except that in the case where taxable earnings are slightly above the personal allowance there is a 10% rate for interest up to a certain level, and that's what's happened here - the starting rate figure shows that only £14.50 was due rather than the £29 that's been paid, which has reduced the amount of unpaid tax.

While the calculations shown seem to be correct we really need some more explanations and additional information on the figures that have been used as the basis for the calculation:

Is the State Pension/State Benefits amount the pension that you mention? If so, then as expected DLA doesn't appear in the calculation.
What is the tax code that has been applied to this payment?
What is the PAYE income, which isn't mentioned in your OP, unless it is the pension?
What is the tax code for this?
How much is the weekly IB payment and when did it start?

And a question about payments after April 2012 is whether either the State Pension/State Benefit or IB is now being taxed before it's paid, which would mean it's less likely that a P800 would be sent for 2012/3 (although there might then be scope to reclaim overpaid tax on the interest).

xylophone

Your mother was under state pension age at the time of your father's death so was entitled to standard personal allowance for 2011-12?

The "state benefit" was bereavement allowance for around six months? http://www.dwp.gov.uk/docs/benefitrates2012.pdf

The PAYE income was about six months of pension from your late father's scheme?

BA and IB were paid gross but were taxable?

Building Society interest is normally taxed at source at 20% but the 10% rate applies in certain instances. http://www.hmrc.gov.uk/taxon/worked-examples.htm