Tax bill sent in error do I have to pay to avoid fine?

Jaycee_Dove

I have been a long term full-time carer and gave up my job 12 years ago to do this. So have very limited income.


As I still had some money coming in from my old job (a writer) I have continued to do a self-assessment form each year but for about 6 years have not earned enough to pay any tax.


I am now over pension age so no longer get Carer's Allowance but have deferred my pension as I was caught in the trap of being a self employed low earing woman carer for years and also just missing out on the new pension which would have given me about £35 pw more for my 42 years stamps. Because it benefits self employed women as the old pension did not.


So the only way to get what I would have got on the new system was for me to voluntarily defer, which I have been doing for the past couple of years and using my small savings to top up paying bills.


Earnings usually have been just enough to cover these but this year I earned the smallest sum ever in my entire work history (£900). And it will likely be similar for 2015-16.


Naturally I was sure I would not pay any tax at all (as my allowance is £10,000 and I have not had to pay anything in recent years when I was earning much more than £900 from book royalty income which slowly falls each year).


So I was really shocked to get a £12 tax bill today with 9 days to pay up or face a whopping fine.


I have called the tax office and they went through with me and say the sum is caused by a rebate of £16 I got last year from tax taken out of my building society savings which I was refunded because I was not paying tax so should not have paid tax on the interest. That is clear enough.


Because my savings have been partly used this year to buy care equipment that my mum (whom I care for) got free when we lived in Wales but we have had to pay for since moving to England to be nearer the rest of her family then my interest gained from that building society account has fallen to just £4 in 2014-15 from the £16 in 2013-14.


What the tax office say is they have misunderstood the years and deducted the £4 from the £16 rebate and are billing me for the rest of the refund. But they should not have done so.


They advised me to put it in writing and explain this but as my call was not recorded and time is short I should do so immediately.


I said I was worried about getting the automatic fine and was told not to worry.


I guess what I am asking is should I enclose a cheque with the letter 'just in case' they take time to amend the records? Or am I on safe ground here not worrying about the possible much larger fine for not paying something I clearly should not owe?

[Deleted User]

So I was really shocked to get a £12 tax bill today with 9 days to pay up or face a whopping fine.

There are no fines attached to the outstanding tax - just on the late submission of forms. What they can do is impose a 5% surcharge if not paid by the end of February and charge you interest, which, in your case would amount to around 1p per week.

Jaycee_Dove

[Deleted User] wrote:

So I was really shocked to get a £12 tax bill today with 9 days to pay up or face a whopping fine.

There are no fines attached to the outstanding tax - just on the late submission of forms. What they can do is impose a 5% surcharge if not paid by the end of February and charge you interest, which, in your case would amount to around 1p per week.

That is really nice to hear, thank you. Your help is really appreciated.