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Taxpayers who receive a letter demanding a settlement following HMRC’s tax code error may not have to pay, according to accountants.
A combination of rules and loopholes could mean that thousands of taxpayers do not have to settle the bill.
If taxpayers gave HM Revenue and Customs all the relevant information at the correct time, such that HMRC could reasonably have been expected to calculate the bill properly, then recipients of demands can appeal against the bill.
In these circumstances taxpayers can apply for an Extra Statutory Concession, or ESC A19, designed to deal with HRMC errors.
Taxpayers have also been warned that, in some instances, the time during which HMRC can legally demand a settling payment may have expired.
If the recipient of a demand letter provided the taxman with additional information needed to correct their tax code, and the taxman failed to act on it, Revenue and Customs can only demand a settling payment up to 12 months following the end of the tax year in question.
There is concern that those faced with repayment demands could be around £100 a month worse off on average next year, as HMRC claws the money back through pay packets.
But it is unclear how payment will be expected from those who have moved into self-employment since the errors.