On November 24th we published a news item about how HMRC were issuing clients with a notice to pay an amount of tax before they had received the client's self assessment. HMRC had taken it upon themselves to assume that the amounts reported in the P11ds, submitted earlier in the tax year were all taxable items when in reality this is not the case. One of the clients that had been affected by this policy within HMRC duly sent in his self assessment just before Christmas and believed, quite rightly that this would correct their assumption that he owed a large amount of tax - here in his own words, is what happened:
'After the panic caused by HMRC when they started issuing P800s in advance of self assessments being completed, I sorted my self assessment out just before Christmas. On 23rd December HMRC sent me a payslip for underpayment of tax to the tune of £3,822. On the 28th December HMRC issued me a repayment of just over £200 as, following self assessment, I had actually overpaid last year.
I've just rang the tax office, more of a box ticking exercise, to ensure I could ignore the letter from 23rd Dec, only to be told that they can see the repayment of tax to me following my self assessment, but the system still tells them I owe £3,822.
After lots of conversation, the nice person on the phone agreed it didn't add up, and is going to escalate this. However, escalation normally takes 3-4 weeks. So I said, what happens at the end of January if I haven't paid, even though it looks like I won't need to? I've been told I will still face a penalty notice, and that I need to pay (or make arrangements to pay) by the end of the month, even though this looks like an error!!'
It does amaze us in the current era of technology how this situation can arise but the message that comes out is get your self assessment completed and submitted early so that any issues or discrepancies can be ironed out well before the deadline. We will keep you posted as to when our client gets his refund!