After the end of each tax year HMRC review the income and PAYE information that they receive from employers, pension providers and banks to ensure that the correct amount of tax has been deducted from an individual’s income. In most cases, the correct tax has been deducted, with no further action required. However, in some cases HMRC discover that the correct tax hasn’t been paid, which means they will send a P800 tax calculation letter to the individual concerned to notify them of the shortfall or excess tax paid. The letter is normally sent sometime between June and September following the end of a tax year.
Discrepancies in the amount of tax paid are likely to be caused by a change in jobs, working for multiple employers or receiving pensions from several sources.
If you receive a P800 calculation it is important to check the calculation to ensure that you agree with it. HMRC don’t always get it right! Check the calculation against the following documents as appropriate: P60, P45, P11D, interest and dividend statements and a PAYE coding notice if you received one (refer to our blog on PAYE coding notices here).
In many cases underpayments arise due to incorrect PAYE codes or employer mistakes. If you disagree with HMRC’s calculation it is important to challenge it by contacting HMRC. If your employer made a mistake without taking ‘reasonable care’, HMRC may ask them to pay the tax instead. If HMRC is at fault you will still have to pay the tax, unless they made mistakes in prior tax years too, in which case it may be possible to get the tax liability cancelled.