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bigduckontax, Accountant
Category: Tax
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I had a letter from inland revenue saying i owed £900 underpaid

Customer Question

i had a letter from inland revenue saying i owed £900 underpaid tax how can this happen trying to telephone them is a nightmare and i drea my next phone bill as you can be put on an advisor will answer shortly at least 20 mins later i have to give up or not be able to pay the phone bill
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

There is no department called the Inland Revenue, it was merged with HM Customs and Excise to form HMRC some years ago. If this demand is headed 'Inland Revenue' it may well be a scam.

Firstly, if the letter does not tell you why HMRC consider that you have underpaid tax you must write to the tax office concerned and demand an explanation. However, the most common error is in tax codes. If you have income from two sources almost certainly it will be being paid by organisations using different tax offices. If both, ignorant of the other's involvement, have allocated you a full personal allowance an under payment is inevitable. You should always check tax codes on each and every time a new one is notified and if they are incorrect request in writing that they be corrected.

Say you have a pension from one source and income from another. It is HMRC practice to isue a coding on the pension including your personal allowance. You must thus ensure that the second source of income is taxed at 0T code to recover tax correctly.

Of course if the amount is correctly owing then it must be settled by the due date. You can always ask if the taxman is prepered to allow a flexible repayment schedule if you cannot meet the full amount in one lump sum. Althenatively any sum under 3K can be recovered through your tax code in the following tax year; another option to put to HMRC.

I do hope that I have been able to shed some light on your position.