The furore surrounding HMRC’s incorrect tax calculations seems to have calmed down to an extent but HMRC are still receiving a high volume of calls from people who are worried about receiving notifications. As such, they have released the following statement: “If you do get a letter it will include a Tax Calculation (form P800) from us telling you if you have paid too much or too little tax for the tax years 2008-09 and 2009-10. The calculation shows your total income and the allowances that are due to you for each of these years. To ensure that the tax system is fair for everyone – where everyone pays their fair share – we are taking action to recoup these funds as painlessly as possible.”
The statement continues: “Those individuals who have overpaid will receive a full refund. Those who have underpaid will make additional payments through the PAYE system, provided the payment due is under £2,000. All payments will begin next year, and no immediate, one-off payment will be required. In cases of genuine hardship HMRC will allow payments to be spread across a period of 3 years. If the payment due is over £2,000, HMRC will write to the individual again setting out the next steps for repayment.”
With regards to contractors who are worried that they may find themselves receiving a P800 detailing an underpayment, this is more likely to affect contractors who have moved positions several times within the financial year. While there have been reports that underpayments will be written off by HMRC, they have confirmed that this will only happen in exceptional circumstances.