HMRC - I "owe Self Assessment tax"
Discussion
Letter arrived today telling me that I "owe Self Assessment tax".
It's just a small amount, but how can this be? I'm a higher rate tax payer and I submit self assessments. HMRC adjust my tax codes for tax relief on business expenses, etc., rather then than refunding me by cheque or direct credit.
So how can I owe this amount? Their calculation error? Oh, and they charge interest every day until I pay!
It's just a small amount, but how can this be? I'm a higher rate tax payer and I submit self assessments. HMRC adjust my tax codes for tax relief on business expenses, etc., rather then than refunding me by cheque or direct credit.
So how can I owe this amount? Their calculation error? Oh, and they charge interest every day until I pay!
Eric Mc said:
Because HMRC do not always recover all taxes due through tax codes. There are various reasons why they do this. There are limits to the recovery through the tax code system.
I hate tax code recovery. It's best to do all self assessment without it impinging on PAYE wherever possible.
Thanks, Eric.I hate tax code recovery. It's best to do all self assessment without it impinging on PAYE wherever possible.
My tax code for this year is 1457L so it seems odd that they missed this £30-odd and send me an unpleasant letter charging interest daily. Is that standard practice, or is it correcting a mistake? And if so, why the daily interest?
Because , for whatever reason, it seems they have decided that some of the liability you owed could not be collected through a PAYE Coding Adjustment. That element of the tax liability can only be collected through the normal Self Assessment procedures. If the tax being collected that way was not paid in full by 31 January 2015, they will have been charging interest since that date and I would strongly advise you to pay it.
If you have any dispute with the amount they are seeking to collect i.e. you have reason to believe that it is incorrect and is not really due or is correct but should have been collected through a PAYE Coding adjustment, you should lodge a formal notice of appeal against the amount being chased. I would also try phoning them up to see if they can explain to you what they are doing.
Being taxed mainly under PAYE does not mean that every tax amount you owe to HMRC is collectible through the PAYE system. In fact, as I said earlier, if a person pays tax through PAYE but also has income that needs to be notified to HMRC on a Self Assessment tax return, my advice is always to keep the Self Assessment tax liabilities separate from PAYE and pay them separately. It avoids lots of confusion.
If you have any dispute with the amount they are seeking to collect i.e. you have reason to believe that it is incorrect and is not really due or is correct but should have been collected through a PAYE Coding adjustment, you should lodge a formal notice of appeal against the amount being chased. I would also try phoning them up to see if they can explain to you what they are doing.
Being taxed mainly under PAYE does not mean that every tax amount you owe to HMRC is collectible through the PAYE system. In fact, as I said earlier, if a person pays tax through PAYE but also has income that needs to be notified to HMRC on a Self Assessment tax return, my advice is always to keep the Self Assessment tax liabilities separate from PAYE and pay them separately. It avoids lots of confusion.
Edited by Eric Mc on Friday 1st May 09:45
Eric Mc said:
Because , for whatever reason, it seems they have decided that some of the liability you owed could not be collected through a PAYE Coding Adjustment. That element of the tax liability can only be collected through the normal Self Assessment procedures. If the tax being collected that way was not paid in full by 31 January 2015, they will have been charging interest since that date and I would strongly advise you to pay it.
If you have any dispute with the amount they are seeking to collect i.e. you have reason to believe that it is incorrect and is not really due or is correct but should have been collected through a PAYE Coding adjustment, you should lodge a formal notice of appeal against the amount being chased. I would also try phoning them up to see if they can explain to you what they are doing.
Being taxed mainly under PAYE does not mean that every tax amount you owe to HMRC is collectible through the PAYE system. In fact, as I said earlier, if a person pays tax through PAYE but also has income that needs to be notified to HMRC on a Self Assessment tax return, my advice is always to keep the Self Assessment tax liabilities separate from PAYE and pay them separately. It avoids lots of confusion.
Thanks again, Eric.If you have any dispute with the amount they are seeking to collect i.e. you have reason to believe that it is incorrect and is not really due or is correct but should have been collected through a PAYE Coding adjustment, you should lodge a formal notice of appeal against the amount being chased. I would also try phoning them up to see if they can explain to you what they are doing.
Being taxed mainly under PAYE does not mean that every tax amount you owe to HMRC is collectible through the PAYE system. In fact, as I said earlier, if a person pays tax through PAYE but also has income that needs to be notified to HMRC on a Self Assessment tax return, my advice is always to keep the Self Assessment tax liabilities separate from PAYE and pay them separately. It avoids lots of confusion.
Edited by Eric Mc on Friday 1st May 09:45
It's not the error or the amnount which bothers me - it's the principle.
It is impossible for me to have underpaid tax because i) I have no control over it as a PAYE employee and ii) HMRC's system should have picked this up with a tax return! It's only £30-odd.
Crazy.
You have absolute control over your own tax affairs. HMRC expects tax payers to be aware of what is going on and alerting them to problems. Claiming "I thought my employer and HMRC were looking after my tax affairs" doesn't hold up as an argument before HMRC.
People need to start taking proper responsibility for their own tax.
People need to start taking proper responsibility for their own tax.
Eric Mc said:
You have absolute control over your own tax affairs. HMRC expects tax payers to be aware of what is going on and alerting them to problems. Claiming "I thought my employer and HMRC were looking after my tax affairs" doesn't hold up as an argument before HMRC.
People need to start taking proper responsibility for their own tax.
Really? With respect, I think that's a bit unfair.People need to start taking proper responsibility for their own tax.
I pay income tax through PAYE. I also submit tax returns to declare savings, etc., and to claim tax relief on business expenses and HMRC refund that via a tax code change.
It all looks about right to me but how can I realistically check that is correct? Unless I pay an accountant? And why should I need to given my fairly basic situation?
That's the mistake so many people make. They assume that because they are under PAYE the system will work flawlessly and calculate the correct tax all through the year,.
The system is not flawless and it often doesn't calculate tax correctly. That is why HMRC states on every Tax Coding it sends out that the taxpayer should check and make sure the assumptions (which are hardly ever 100% correct) being made on the Tax Coding are correct.
When it turns out the coding wasn't right, it's hard for the taxpayer to say it's not their fault when HMRC asked them to check it and report any problems to them.
I completed well over 100 Self Assessment tax returns last year. The handful that really caused me problems all related to people who were mainly taxed under PAYE. Self Assessment and PAYE do not mesh very well together.
You might find that having an accountant perform a "health check" on your PAYE affairs or Self Assessment situation might work out very worthwhile.
The system is not flawless and it often doesn't calculate tax correctly. That is why HMRC states on every Tax Coding it sends out that the taxpayer should check and make sure the assumptions (which are hardly ever 100% correct) being made on the Tax Coding are correct.
When it turns out the coding wasn't right, it's hard for the taxpayer to say it's not their fault when HMRC asked them to check it and report any problems to them.
I completed well over 100 Self Assessment tax returns last year. The handful that really caused me problems all related to people who were mainly taxed under PAYE. Self Assessment and PAYE do not mesh very well together.
You might find that having an accountant perform a "health check" on your PAYE affairs or Self Assessment situation might work out very worthwhile.
I can remember one year where my tax code calculation had about six or seven items on it - all of which were wrong. Overall, though, the end result was about right. I thought it was better not to tell them what the errors were as if they attempted to correct them the end result would probably be incorrect
Like it or not, under self-assessment the individual does take responsibility - whether you think its fair or not, that's the way it is
Like it or not, under self-assessment the individual does take responsibility - whether you think its fair or not, that's the way it is
Whats your gripe? You sent in a self assessment declaring everything, there is a small difference in what you paid and whats due, you've not paid the difference yet (although this is in itself surprising as small amounts are usually added to the next years tax code) and they are chasing you for debt with interest? Have you ignored the subsequent bills?
The reasons for deviation are numerous:
- Interest received on savings can only be an estimate in your tax code and can differ in reality
- Dividends on shares, similar
- Benefits you receive in employment sometimes have to be retrospectively calculated, medical insurance is a common one.
Either way, there is a difference. When you complete your self assessment on line (you may not have done), it gives you a break down of all the income, tax codes and thresholds etc and tells you whats due v paid.
The reasons for deviation are numerous:
- Interest received on savings can only be an estimate in your tax code and can differ in reality
- Dividends on shares, similar
- Benefits you receive in employment sometimes have to be retrospectively calculated, medical insurance is a common one.
Either way, there is a difference. When you complete your self assessment on line (you may not have done), it gives you a break down of all the income, tax codes and thresholds etc and tells you whats due v paid.
Edinburger said:
My tax code for this year is 1457L so it seems odd that they missed this £30-odd and send me an unpleasant letter charging interest daily. Is that standard practice, or is it correcting a mistake? And if so, why the daily interest?
Is it not possible to see where the error arose? They must disagree with something you did on your self-assessment.Or did it say you owed money but you didn't pay it, assuming it would be adjusted into your tax code? You might have missed the deadline for that.
Jonsv8 said:
Whats your gripe? You sent in a self assessment declaring everything, there is a small difference in what you paid and whats due, you've not paid the difference yet (although this is in itself surprising as small amounts are usually added to the next years tax code) and they are chasing you for debt with interest? Have you ignored the subsequent bills?
The reasons for deviation are numerous:
- Interest received on savings can only be an estimate in your tax code and can differ in reality
- Dividends on shares, similar
- Benefits you receive in employment sometimes have to be retrospectively calculated, medical insurance is a common one.
Either way, there is a difference. When you complete your self assessment on line (you may not have done), it gives you a break down of all the income, tax codes and thresholds etc and tells you whats due v paid.
No, you've misunderstood.The reasons for deviation are numerous:
- Interest received on savings can only be an estimate in your tax code and can differ in reality
- Dividends on shares, similar
- Benefits you receive in employment sometimes have to be retrospectively calculated, medical insurance is a common one.
Either way, there is a difference. When you complete your self assessment on line (you may not have done), it gives you a break down of all the income, tax codes and thresholds etc and tells you whats due v paid.
I completed and submitted my self assessment. I was then sent a new tax code and assumed all was in order just like in previous tax years.
Out of the blue, I then received a demand for £34 because of an alleged underpayment. No explanation and no calculations were given. The letter urged me to pay this promptly because it accrues interest daily.
That's my gripe. If there was an anomoly or an error or whatever then fine, they should send me a polite letter explaining this and asking me to make the payment or indeed offer to adjust my tax code.
But to send a blunt letter and to add interest daily from the date of the letter is out of order, in my view. If any financial services company in the proivate sector did that to customers then they'd quite rightly be hauled through the press for it.
Sheepshanks said:
Edinburger said:
My tax code for this year is 1457L so it seems odd that they missed this £30-odd and send me an unpleasant letter charging interest daily. Is that standard practice, or is it correcting a mistake? And if so, why the daily interest?
Is it not possible to see where the error arose? They must disagree with something you did on your self-assessment.Or did it say you owed money but you didn't pay it, assuming it would be adjusted into your tax code? You might have missed the deadline for that.
The letter only said there was an underpayment and that I had to pay it urgently. As usual I couldn't speak to anyone at HMRC so I just paid it because the amount was insignificant. My gripe is with the principle.
oop north said:
I can remember one year where my tax code calculation had about six or seven items on it - all of which were wrong. Overall, though, the end result was about right. I thought it was better not to tell them what the errors were as if they attempted to correct them the end result would probably be incorrect
Like it or not, under self-assessment the individual does take responsibility - whether you think its fair or not, that's the way it is
Yeah, I realise that. I did take responsibility and I've no idea why or how this alleged underpayment came from!Like it or not, under self-assessment the individual does take responsibility - whether you think its fair or not, that's the way it is
Edinburger said:
I completed and submitted my self assessment. I was then sent a new tax code and assumed all was in order just like in previous tax years.
Out of the blue, I then received a demand for £34 because of an alleged underpayment. No explanation and no calculations were given. The letter urged me to pay this promptly because it accrues interest daily.
That's my gripe. If there was an anomoly or an error or whatever then fine, they should send me a polite letter explaining this and asking me to make the payment or indeed offer to adjust my tax code.
I imagine that if you log in to your self-assessment account then the explanation will lie somewhere (I doubt it will be obvious) in there.Out of the blue, I then received a demand for £34 because of an alleged underpayment. No explanation and no calculations were given. The letter urged me to pay this promptly because it accrues interest daily.
That's my gripe. If there was an anomoly or an error or whatever then fine, they should send me a polite letter explaining this and asking me to make the payment or indeed offer to adjust my tax code.
It's supposed to be all done on line. I would guess the letter is because you've ignored a payment due in your online account.
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