underpayment of tax

brynithel3

I have a problem with HMRC trying to reclaim £2700 in underpaid tax for years 10/11, 11/12 and 12/13. I retired 5 years ago and was in receipt of two pensions after 18 months I felt as though I was not paying enough tax so I rang HMRC to report this. They told me that they would review my codes and inform the pension providers. Two years later I still felt I was not paying enough tax so I contacted them again. They informed me that I had underpaid over £2000 in tax and would amend the codes to reclaim it over three years. I contacted them again two weeks ago to explain that I still did not feel that they were taking enough tax and they said that I had underpaid again by approx. £100. I received a letter explaining how they would recover the tax by dropping my code to 12L this year which would recover £614 next year they plan to recover £1500 and the third year £614. I contacted them again yesterday to ask if they could equal the repayments out over the three years. It was while I was talking to them on the telephone I started researching this on the Web. It seems I have been too honest. The person I talked to this time said he would put a referral through to wipe out £280 of the debt and to see if they could even out the payments. He couldn't put me through to an advisor to appeal these demands. So today I telephoned again spoke to an advisor who wasn't very helpful and gave reasons why I feel I should be be held responsible for this underpayment.
Please can anyone help?

CLAPTON

the first thing to do is to check what tax you should have paid


maybe if you posted up the actual figures we could check them for you

xylophone

If you felt that you were not paying enough tax presumably you had calculated how much tax you should be paying? Did you not set aside some money while awaiting a final resolution?

Did you ever write to HMRC?

chrismac1

Post up the numbers. HMRC make a load of blunders, fingers crossed this might be one of them!

Delphina

In Feb or March each year, you should telephone HMRC and tell them how much income you expect to get from each private pension and State Pension. They should be able to review all tax codes for you, if needed, by splitting tax-free personal allowance for you. Then you should keep an eye on each payslip to see if the correct tax code is used against each pension. You need your Tax Coding Notices for this. This is the best you can do although it is not 100% effective. The last resort is to offer to self assess through Self Assessment each year but, speaking from what I have observed and no offense intended, do not do it if you are not sure if you can when you get much older.

As for the previous year underpayment of tax, you can ask to pay for all in one lump if you can manage. This will avoid putting it through tax codes for several years, because if the codes are operated incorrectly or the codes are incorrect, you will be faced with the same issue again a few years down the line.

brynithel3

Thanks everyone for your inputs. I am not querying the amount but if it was not my mistake but theirs for not acting on information received by me. They did not discover this underpayment I did. So should I have to repay it all. I reported this over 2 years ago and they did not act on this information. They said that they had a full record of all my communications with them but would not confirm times and dates and what was agreed.
It appears they can only reclaim the last three years so if I hadn't reported it this situation could have gone on for years without being discovered.