- Churchill Tax
Warning – HMRC’s Tax Calculations May Contain Errors!
It’s the time of year when HMRC sends out its P800 tax calculations for the previous tax year. In what circumstances are you likely to receive one and what steps should you take if you do?
Who are P800s for?
A P800 is an informal tax calculation issued by HMRC to individuals who are outside the self-assessment system. It only sends one if you have employment or pension income and it believes you have under or overpaid income tax. Alternatively, it can issue a “simple assessment” (a Form PA302 ) but these aren’t so common and are governed by different rules.
Timing
HMRC usually issues its P800a between the start of September and the end of November following the end of the tax year to which it relates. However, it can issue P800s at any time in the four years following the year in question. If you receive one later than this you should advise HMRC that it has missed the deadline.
Check all the figures
As with all tax statements from HMRC you should check the figures carefully. While HMRC isn’t out to fiddle money from you it can make mistakes. What’s more, P800 frequently include estimates or omit figures. This might not be obvious. Even though HMRC obtains details of your earnings, pension and interest, and any tax paid on them direct from your employer, pension company and bank etc. they are not always accurate, plus mistakes can as easily be made by employers, banks etc. as well as HMRC.
Extra care needed
Pay special attention to the figures for other income shown on a P800 , e.g. dividend and property rental income. Unless you have reported the actual figures to HMRC those appearing on the P800 will invariably be estimated and must be changed. If you find a mistake you should notify HMRC as soon as possible (although there’s no time limit) to prevent it sending a demand or adjusting your tax code to collect the tax.
Don’t overlook tax reliefs
It’s not just the income and tax paid details on a P800 you should check. You may be entitled to tax deductions, for example, job-related expenses, e.g. for travel, subscriptions to professional bodies, higher rate pension contribution relief. HMRC has no knowledge of these when it prepares the P800 calculation unless you have provided it with details.
TIP:
The P800 includes details of how you can contact HMRC about the calculation if you believe it’s wrong.
TIP:
While it’s tempting to ignore mistakes on a P800 if they favour you it pays to tell HMRC about them. Failing to do so could result in you being charged a penalty and interest if the error comes to light later.
Overpayments
If the P800 shows that HMRC owes you money it will send you a payable order within two to three weeks. If you haven’t checked the figures by the time it arrives we suggest you don’t bank the payable order until you have and you’re satisfied that the P800 is correct. It’s much easier to return the order to HMRC than to repay the money.
Conclusion
: If you have employment or pension income and aren’t required to complete a self-assessment return, you may receive a P800. Check all figures against your records and notify HMRC of any errors. Pay special attention to dividend and rental income, plus outgoings for pension contributions and job expenses, as these are likely to be estimated.