P800 Notices and Applying for the tax to be waived

The news that 1.4 million taxpayers are to receive notices that they have underpaid an average of £1,428 in tax has attracted widespread media coverage and come as a nasty shock to those affected.

The problem has arisen due to HMRC merging its antiquated computer systems into a new integrated system. The new system links the taxpayer’s sources of income and therefore looks at the individual’s tax position as a whole and compares this with the tax that has actually been deducted under PAYE, whereas this had not previously been the case under the old system.

Where there is a discrepancy between the tax that has actually been paid and the amount deducted under PAYE, the taxpayer will receive a notice from HMRC.

Who will this affect most?

Potentially, the problem could affect anybody who falls within the PAYE system although the problem is more likely to affect unrepresented taxpayers who are not within the Self Assessment system. Those most likely to be hit include:

• old age pensioners, particularly those with pensions from more than one source;
• people who have taken on part-time work to supplement their income from their full-time work in order to make ends meet;
• employers whose circumstances have changed; for example, those who have changed jobs or who receive new benefits in kind from their employment, eg medical insurance, a loan from their employer or a company car. 

Applying for the tax to be written off under ESC A19

In certain circumstances, it may be possible to apply for the tax underpaid to be written off by virtue of ESC A19.

This may be possible in the following circumstances:

• The taxpayer could reasonably have expected that their tax affairs were on order

And either:

• HMRC have allowed arrears to build up over more than one complete tax year, despite all relevant information having been provided to you;

or

• HMRC have failed more than once to make proper use of the relevant information provided to you about your income.

ACCA have produced template letters for both agents and taxpayers who wish to make an application for the tax to be waived under ESC A19 (see related documents).

ACCA have also produced a simple calculation template to help taxpayers check whether their tax calculations are correct. PLEASE NOTE: The calculation is only suitable for taxpayers taxed under the PAYE system and does not consider any additional income, such as investment income (see 'Related documents').

Taxpayers needing professional advice should contact an ACCA firm for further advice.