More income tax demands on the way

  • By Josh Hall
  • 12 January 2011
More income tax demands on the way

Some 450,000 further income tax demands will soon be arriving on doorsteps as a result of underpayments.

The government has announced that it expects a further £180 million to become due, in addition to the six million demands that have already been sent out.

The latest round of demands relates to recalculations of tax codes for the 2007-08 tax year. Underpayments for tax years before this will be written off.

Taxpayers who made overpayments, however, will still get a refund even if the overpayment occurred in a tax year prior to 2007-08.

In cases where HMRC believes less than £300 is owed, the bill will be written off. They will try to recover sums larger than this through the PAYE system.

The demands are a result of a tax coding error at HMRC that saw incorrect payments made by millions of taxpayers.

As previously reported, taxpayers who receive demands are being encouraged to consider whether or not they are legally obliged to pay. In cases where HMRC has failed to act promptly on information given to them, recipients may not have to pay the bill.

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