Warning HMRC income tax figures are incorrect

Letters sent out by Her Majesty’s Revenue and Customs (HMRC) informing people they have paid too little tax could be based on inaccurate figures, an accountancy firm has warned.

HMRC sends out P800 forms to taxpayers it believes have over- or underpaid income tax in earlier years.

in 2011, HMRC sent out 1.2 million P800 forms concerning underpayment and around three million concerning overpayment.

However, accountancy firm Kingston Smith has warned HMRC's estimates of taxpayers' earnings on these forms often "vary significantly" from their actual income.

"When taxpayers receive a letter on official HMRC paper detailing their tax liability, many naturally assume the numbers are correct," said Andrew Shaw, head of personal tax at Kingston Smith.

"Our experience shows this is not always the case, often because some of the figures used represent last year's known income.

"Whilst the earnings taxed under Pay As You Earn (PAYE) are usually correct, the figures indicating other sources of income are sometimes simply wrong."

Shaw added this discrepancy can occur when taxpayers' dividends of bank interest had changed since the previous year.

He urged taxpayers to check HMRC's estimates against their true income to ensure they do not overpay tax.

A spokesperson for HMRC said: "Anyone who gets a P800 under- or overpayment from HMRC but disagrees with the figures should call HMRC on the number on the documentation to discuss the matter straight away.

"We are sorry that some people faced an unexpected tax bill, and we want to handle them as sympathetically as possible.

"Anyone struggling to pay an underpayment can request up to 3 years to pay."