PAYEment in the post...
On behalf of HM Revenue & Custom (HMRC), Royal Mail is delivering millions of Pay as You Earn (PAYE) tax calculations (form P800) to taxpayers.
The reason for this is that HMRC’s new PAYE computer has started to reconcile the PAYE records for every employee for the tax years 2008/09 and 2009/10. Previously these reconciliations were done manually, and the work got very behind.
It will take weeks to issue these forms and you may not receive a letter immediately, if at all. You should not receive a form P800 if you normally complete a self-assessment tax return, because all your tax liabilities are reconciled on your annual self-assessment form.
If you receive a form P800, check the information against your other tax papers, e.g. P60 and P11D, that detail your total pay and benefits for the tax years concerned. Contact HMRC immediately on the number shown on the form if you find an error.
Beware the scammers
Normally the tax reconciliation will produce an overpayment of tax, in which case you should receive a cheque for the repayment within a few days. You do not need to supply any further details to HMRC to get this repayment.
Please do not respond to emails or telephone calls asking for your bank details in connection with a tax repayment, as those calls or emails are almost certainly part of a fraudulent scam.
A recurring error?
If you are due a tax repayment it may be because you were not given all the tax allowances due to you. Check whether the same mistake occurred in earlier years.
If it did, you can submit claims for the allowances that were due to you for the tax year 2004/05 or later, assuming that you have not already submitted tax returns for those years.
There will be nothing to pay immediately if the tax calculation shows underpaid tax. Where you owe less than £300 for either the 2008/09 or 2009/10 tax years, the amount due will be deleted from the PAYE computer so you will not have to pay.
The tax will be collected through the PAYE system, if you owe up to £2,000 for the two tax years. In early 2011 you should receive a PAYE code (form P2) that sets the tax due against your allowances for 2011/12. As a result you will have slightly more tax deducted from your earnings in each month to 6 April 2012.
Extra Statutory Concession A19
HMRC will issue a payment request if you owe more than £2,000, and ask you to make payments starting in 2011. However, if you will have difficulty in paying the amount due, whether this is more or less than £2000, you can ask to pay over an extended period of up to three years.
Where you can prove that HMRC ignored information relating to your tax affairs for more than 12 months after the end of the tax year, you may be able to avoid paying any tax due. This procedure is called Extra Statutory Concession A19. You need to make a special claim for this to apply, which we can help you with.