Inaccurate HMRC figures could mean you pay too much tax
People who receive a P800 tax form from HM Revenue & Customs could be paying too much tax, a firm of accountants has warned.
The P800 forms are sent to people whom HMRC believes have paid too much or too little tax in previous tax years. The form includes investment income figures and the tax owed or to be refunded and are sent to those who work on an employed basis and are taxed on the PAYE system but also have some external income.
However, HMRC does not include accurate figures on the forms, instead it estimates the tax liability on the investment income based on figures from previous years.
Andrew Shaw, head of personal tax at accountants Kingston Smith LLP, said HMRC should do more to flag the estimated figures to taxpayers and told people to check the accuracy against their own records of their income.
He added that as interest rates on bank and building society accounts have fallen, many people could be paying tax based on income made when rates were higher.
‘When taxpayers receive a letter on official HMRC paper detailing their tax liability, many naturally assume that the numbers are correct. Our experience shows that this is not always the case, often because some of the figures used represent last year’s known income,’ said Shaw.
‘Whilst the earning taxed under PAYE are usually correct, the figured indicating other sources of income are sometimes simply wrong. This can occur for any number of reasons – for example, if the taxpayer’s dividends or bank interest have changed since the previous year, which is more likely than not.’