New tax guide issued

A comprehensive guide aimed at helping those who receive an HMRC letter informing them that they have underpaid or overpaid tax in the 2012-13 tax year, has been launched by the Low Incomes Tax Reform Group (LITRG) according to Harris & Co chartered accountants Northampton.

The guide will show taxpayers how to check their calculations and where appropriate, take action.

HMRC began sending out the first PAYE calculations for 2012-13 last week, some of which will now have landed on taxpayers’ doormats.

LITRG’s chairman, Anthony Thomas, said:

‘People receiving tax calculations from HMRC should always check they are correct. As HMRC have largely dealt with the backlog of earlier years’ reconciliations, most people being notified of underpaid tax for 2012-13 will have to pay. But there might be some instances where employers, pension providers or HMRC have made errors where there is a case for challenging the calculation.’

‘The key message is that all calculations should be checked and action taken relevant to the individual circumstances, as taxpayers could be missing out on claims. If people do owe tax, they should investigate their payment options. Those on low incomes should check whether any tax they may have to pay has any effect on their entitlement to means-tested benefits and they should tell HMRC as soon as possible if paying tax is likely to cause severe hardship.’

The guide includes tips on how to check the calculation as well as examples of the letters taxpayers could write in response to receipt of a tax calculation.

It also contains a guide to ESC A19, an Extra-Statutory Concession under which HMRC will sometimes write off arrears of tax and details on when HMRC should investigate whether someone’s employer or pension payer should be asked to pay tax arrears rather than them.

It also shows when someone can challenge an underpayment shown on a PAYE tax calculation, where they feel HMRC have given misleading or incorrect information or advice.

The LITRG stress that if taxpayers are claiming that ESC A19 applies, they should not be tempted to pay off any PAYE underpayment before their application has been considered. If they do clear it, HMRC will claim that there are no longer any arrears in respect of which ESC A19 can apply, and refuse to consider the concession. If taxpayers do decide to pay something towards the arrears, they must make sure HMRC know that it is a payment on account and made without prejudice to the A19 claim.

The full guide is available from the LITRG.