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Help with PAYE underpayments in 2007/08
18/01/2011, by Low Incomes Tax Reform Group, Tax Articles - Income Tax
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LITRG issue further help for up to 450,000 taxpayers receiving calculations of tax underpaid for 2007/08, urging people to check and challenge them.


It was announced last week that shortly HMRC would start issuing P800 tax calculations to PAYE taxpayers whose records show they have not paid the right tax for the 2007/08 tax year.

Whilst the calculations for some will show they have paid too much tax, an estimated 450,000 will be told they have not paid enough and will be asked to repay over £300 for 2007/08. This follows HMRC calculations already issued for 2008/09 and 2009/10.

A question of fairness

LITRG consider this action by HMRC as very unfair for the following reasons:

  • A significant proportion of people receiving these demands will be on low incomes and will have not put money aside to meet this liability, and a significant proportion will be pensioners.
  • HMRC chose not to deal with 2007/08 potential liabilities in good time because it suited them to focus on other priorities.
  • It is perverse to deal with 2008/09 and 2009/10 causing untold anxiety to unrepresented taxpayers and then to go back to an even earlier year.
  • Dealing with years long past is always more difficult than the year just ended and even more so for people unused to dealing with HMRC.
  • As we have observed in dealing with the later two years many of the recipients of demands are pensioners or people with disabilities as it has been HMRC’s failure to use information provided to them by the Department for Work and Pensions (DWP) that has given rise to many of the errors.
  • In many cases the individuals receiving demands could have been on means-tested benefits in 2007/08 when the extra tax liability would have been met by a local authority or the DWP. The DWP are now refusing to backdate any help for people who are caught by the latest HMRC demands.

Fortunately, there is a range of ways to challenge the latest demands.

LITRG help

LITRG have now set out our recommended approach if you receive a PAYE tax calculation ‘P800’ showing you have not paid enough for the 2007/08 tax year.

Much of our existing guidance for 2008/09 and 2009/10 also applies to 2007/08, but there are extra considerations. Importantly:

  • You should be even more likely to succeed in your argument for tax to be written off under Extra-statutory Concession A19.
  • You have extra cause for complaint as, entirely within the law, you have probably thrown away papers relating to 2007/08, making it very difficult to check the calculation.

We therefore urge you to argue your case. To help you, we have provided on the LITRG website:

  1. A sample letter to help you write to HMRC (downloadable as a PDF or Word document).
  2. Some ‘questions and answers’ covering what we think might be common issues and how you might use our sample letter in certain situations.

About The Author

The Low Incomes Tax Reform Group (LITRG) is an initiative of the Chartered Institute of Taxation to give a voice to those who cannot afford to pay for tax advice. LITRG comprises tax specialists from professional practice and the voluntary sector, from publishing and from HM Revenue & Customs, together with people from a welfare benefits and social policy background. Visit www.litrg.org.uk for further information.
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