H M Revenue & Customs Bill 2 million people for underpaid tax

HMRC have started writing to taxpayers whose income tax for 2013-14 is wrong, some having paid too much tax and others too little. This has happened despite the fact that HMRC have implemented a new system for calculating and collecting tax under PAYE called Real Time Information which was to ensure that a taxpayer's records were updated as soon as any changes such as moving job or retirement took place.

If a taxpayer is in the unfortunate position of receiving a demand for tax underpayment then they need to carefully check that the information HMRC have used is correct and that it does agree with their P60s, P45s or other financial records, it should not be taken for granted that it is error free. Likewise if details of an overpayment have been sent this should be checked just as carefully.

Each taxpayer should also be aware of the allowances which are due to them before their income is taxable and the rate of tax which is applicable to this income.

If a taxpayer receives a demand for an underpayment of income tax for a year or years prior to 2013-14 then they need to consider why this delay has occurred and why these arrears arose, as the fault may lie with HMRC, and they should take further advice as to whether these arrears are recoverable by HMRC.

The Charity Tax Help for Older People provides free help and advice to those aged around 60 or over and in receipt of an annual income of up to £20,000 and will assist taxpayers in dealing with underpayment or overpayment cases. All that is required is a phone call to the helpline or an email to request assistance.