Advice: The tax office claims I owe them money. What are my rights?

Jaclyn Glover, Deputy Manager, Citizens Advice Newtownabbey.
Jaclyn Glover, Deputy Manager, Citizens Advice Newtownabbey.

By Jaclyn Glover, Deputy Manager, Citizens Advice Newtownabbey

Q: I have received a P800 letter from the tax office saying that I have underpaid tax for the year. I do not feel that I should have to pay this back. What are my rights?

A: At the end of every tax year, employers and pension payers are required to send HM Revenue and Customs (HMRC) details of income received and tax paid for each taxpayer. If the wrong amount of tax has been paid, HMRC will send the taxpayer a P800 tax calculation form showing whether a refund or a further payment is due. The form will be sent with explanatory notes.

The tax calculation should be checked to make sure that all income and any reliefs and allowances due have been included correctly. For example, make sure that any figure for state pension does not include a non-taxable benefit such as attendance allowance. If you do not agree with the calculation or do not understand it, you can contact HMRC or your local Citizens Advice Bureau.

If a refund is due, this should be sent automatically without any need to make a claim.

If there is an underpayment of less than £3,000 and you earn less than £30,000 per year, this will normally be collected by an adjustment to the PAYE tax code in the following tax year and no interest will be charged. For example, if tax was underpaid in the year 2014-15, it will be paid back in the tax year 2015-16. This means that it will be collected in equal instalments throughout the year in addition to the current tax due.

If this rate of repayment is likely to cause hardship, you can ask HMRC to extend the period of repayment for up to three years. If you earn over £30,000, the amount that HMRC will collect though PAYE will be higher.

If the underpayment is more than £3,000, interest may be payable on the outstanding amount. However, HMRC may waive the interest provided they are contacted to make arrangements for repayment. This could be through the tax code and/or by other means.

• Challenging a P800 underpayment

In limited circumstances, it may be possible to get an underpayment written off under the terms of Extra Statutory Concession A19. This may apply if:-

• HMRC had all the information they needed to get the tax right; and

• HMRC delayed in using that information; and

• the taxpayer can show s/he reasonably believed s/he did not owe the tax.

If you believe that the underpayment is due to an error by the employer or pension payer, for example, because they failed to apply the correct tax code, then the employer or pension payer may be liable for the underpayment instead. In these circumstances, contact HMRC and ask them to pursue the employer or pension payer for the underpayment, giving reasons.

If none of these circumstances apply, but you believe that HMRC is at fault, for example because of unreasonable delay or misleading information, you may want to consider making a formal complaint using the HMRC complaints procedure. If unresolved, the complaint can be referred to the Adjudicator and to the Ombudsman and may succeed in getting the underpayment written off that way.

• Get free, confidential and independent advice from your nearest Citizens Advice – go to or call at: Citizens Advice Newtownabbey, Dunanney Centre, Rathmullan Drive, Rathcoole, Newtownabbey, BT37 9DQ. Telephone advice is available 9am – 4pm each day on 028 9085 2271 (Lunch 1pm - 1:30pm), email advice is available at