UK Taxpayers to Get Tax Calculations from HMRC
The U.K. tax authorities (HMRC) announced on 6 September 2010, that they are beginning to send tax calculations to individuals who have either paid too much or too little tax in the 2008/09 or 2009/10 U.K. tax years1. HMRC hopes to have contacted all individuals who have underpaid or overpaid for these years by January 2011.
This calculation (form P800) will show the total income and allowances due to each individual in these years and will only be sent to individuals who have paid too much or too little tax. If an individual does not receive a copy of this calculation, there is no action to be taken.
Reviewing the Calculation
If individuals do receive such a calculation, they will need to review it to ensure that they agree with it. HMRC will not be forwarding a copy of the calculation to agents and, therefore, individuals will need to send a copy of the calculation to their tax advisers.
Unrepresented taxpayers will need to check the calculation and if they believe the calculation is wrong, contact HMRC directly.
Individuals Who Have Paid Too Much Tax
HMRC will automatically issue a repayment, usually within one week.
Individuals Who Have Paid Too Little Tax
If the under-payment is less than £2,000, HMRC will adjust the individual’s tax code for 2011-12. This will adjust the individual’s tax withholding to effectively spread the collection of the amount underpaid over a 12-month period.
However, if this payment is more than £2,000, HMRC will contact the individual to ask for a direct payment. Again, individuals should contact their tax advisers for advice.
If an employee is tax equalized, part or all of the refund may be due to the employer. It is unlikely that such calculations will be correctly processed without the completion of a U.K. tax return. Fortunately, such employees usually have a tax adviser and will need to send their advisers a copy of the calculation on a timely basis. They should not assume the repayment is due to them.
The nature of international assignments is such that employees who have experienced U.K. withholding and are either on assignment in the U.K. or have been assigned from the U.K. to another country are likely to have complicated tax affairs. These calculations are unlikely to be correct unless a tax return for the appropriate year has been submitted.
Many employees, whether on assignment or not, prefer to discuss withholding issues in the first instance with the employer who operated the withholding. It is, therefore, possible that over the coming months employers’ HR and PAYE departments will find they have an increase in the number of queries from their employees.