Taxpayers warned to check their P800 Tax Calculation figures, which could contain incorrect estimations

A recent spate of P800 Tax Calculations issued by HM Revenue & Customs (HMRC) contains inaccurate income figures which are estimated, but are not declared to be so. The purpose of the P800 Tax Calculation is to inform taxpayers whether HMRC consider they have paid too much or too little tax in earlier tax years, so many would imagine the figures it contains would be correct.

However, the calculation is often based on the previous year’s known sources of income, which could vary significantly from the actual figures.

Head of Personal Tax at top 20 accountancy firm Kingston Smith LLP, Andrew Shaw, explains: “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.

He continues: “Whilst the earnings taxed under PAYE are usually correct, the figures 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.

Shaw urges: “Taxpayers who receive a P800 Tax Calculation should always check the numbers against their own records and notify HMRC immediately of any discrepancies; unfortunately, once again HMRC cannot be trusted to get it right.”

P800 Tax Calculations are issued to individuals that HMRC believe have not paid the right amount of tax according to their records. It should not be issued to taxpayers who are registered for Self Assessment, although this has been known to occur.

In a further display of inefficiency, HMRC have recently issued a host of unnecessary tax return reminders about the 31 January online filing deadline to Self Assessment taxpayers who have already filed, and in some cases paid the tax due on, their tax returns. A number of the letters – some of which were dated as early as 5 December, but were not received by taxpayers until over a month later – have been wasted on taxpayers who had already met the online Self Assessment deadline for online filing last year.