Over the next few months, millions of people who pay tax through PAYE will receive P800 calculations from HMRC telling them they have either underpaid, or overpaid, tax. Any calculations should be treated with caution – it is by no means certain that they will be correct or should be agreed.
For people who do not normally fill in a tax return, each year HMRC compare the amount of tax deducted from wages and pensions with the amount that was actually due. Where there is a difference, they issue a tax calculation on form P800 which shows how much tax HMRC think is either owed or due to be refunded.
Any day now, HMRC will start sending out the P800’s for the 2018/19 tax year.
There are three main things to note:
- It is an informal calculation, not a tax demand
These forms represent an informal calculation only, not a demand for tax. If you do not understand the P800 calculation you shouldn’t rush into anything – you should ask HMRC for a detailed explanation. If you still don’t understand it, we tell you where to get help at the end of this piece.
Please be aware that if you ignore your P800 and it shows that you owe HMRC tax, then at some point HMRC are likely to issue a more formal assessment (or a tax return for you to complete), which is HMRC’s current practice for making the debt enforceable.
- Have you underpaid tax?
The 2018/19 tax year was a week ‘53’ tax year. Thus, many of the calculations issued showing 2018/19 underpayments will be correct. But there are still a few things to bear in mind if you receive a P800 that shows you have underpaid tax:
- If it is for an earlier tax year, HMRC may be too late to be collect it. Apart from in cases of taxpayer neglect or fraud, HMRC are not permitted to assess tax that fell due more than four tax years previously. Therefore, the earliest tax year that HMRC should be looking back to is 2015/16 (which ended on 5 April 2016 and can be assessed until 5 April 2020). If the P800 is for a more recent tax year but you think that HMRC have all that time had the information they needed to calculate your tax correctly but have simply not used it until now, you should ask them to consider writing off the underpaid tax – under the terms of ‘extra-statutory concession A19’.
- If you have underpaid tax and you think it was your employer or pension provider’s fault for not operating the code given them by HMRC correctly or through making some other mistake, then in strict law HMRC must first call upon your employer or pension provider to make good the shortfall. If you think you fall into this category, and HMRC are now trying to recover the underpaid tax from you, then you should challenge HMRC.
- The calculation produced by HMRC is not necessarily the full picture of your tax situation. Even if it shows you owe tax, it may be overstated as you may be entitled to further tax reliefs or HMRC may not have matched all of their records for you – for example, they may have missed out a source of income upon which tax was paid. HMRC might also have used estimated figures in the calculation. This will not necessarily be obvious to you, so you need to check all figures carefully against your own records.
- LITRG and the tax charities can help
For those who want a brief overview of the P800 process, the LITRG have produced this helpful P800 factsheet.
There is a detailed page on the LITRG’s website which sets out in a step-by-step guide how you should check your P800.
It contains information on what to do if you think your P800 is wrong or if you think you may have difficulty paying any tax that is shown as being due. It also tells you what to do if you think you have paid the wrong amount of tax, but you have not received a P800 calculation.
For guidance on how to pay your P800 bill, including via your tax code or by making a ‘voluntary payment’, please see the LITRG’s news piece How to pay the tax bill shown on your form P800.
If you feel you need more help dealing with your P800 (and/or any tax returns issued as a consequence of ignoring a P800), please get in touch.