HMRC sent me a £38,000 tax bill and would only deal with my case by post
HMRC sent me a £38,000 shock tax assessment and would only deal with my case by post
HMRC has had to apologize to a taxpayer after demanding thousands of pounds for an unpaid bill only to discover it was a typo.
David – not his real name – was reeling after receiving a bill for over £38,000 from HMRC, despite usually being taxed at source via PAYE.
After the initial shock of receiving the bill, David tried to contact HMRC only to find that the phone line was closed.
It came just a month after HMRC’s self-assessment helpline closed for three months as part of a pilot for a ‘seasonal’ model.
David received a bill for over £38,000 and was unable to appeal to the tax authorities
David said this caused “considerable stress and worry” because he was living on his military pension and his partner earns minimum wage by working in a university.
HMRC has been urging taxpayers to use its online chatbots as part of its digital push, but when David reached out via this method, he was told that the team he was supposed to speak to could only be contacted by post.
Despite writing a letter of appeal, he was flatly ignored until This is Money contacted HMRC on his behalf.
A closer look at what happened reveals a sad saga.
When HMRC received its 2020/21 tax return, it was concluded that David had overpaid almost £8,000 in tax, which was refunded in October 2022.
But HMRC subsequently found that David had omitted another income of over £40,000, resulting in his income crossing the £125,140 threshold. This reduced his personal deduction to zero, meaning that David had actually underpaid his tax bill by £388.75.
HMRC wrote to David in July 2023 informing him of the tax he owed, the amount he had wrongly repaid in October 2022 and the interest accrued.
However, HMRC erred and wrongly said he owed £38,368.35. In fact, the amount should have been £8,368.35.
But it doesn’t stop there.
After This is Money asked HMRC to look into the matter, they found out that David had in fact not omitted any information in his 2020/21 tax return.
The form, which was filed on paper, included details of how much tax he had paid at source on his income in a separate question.
Due to an error on their part, the amount David had omitted according to HMRC was incorrect.
Fortunately, the case has now been resolved and all money David owed according to the IRS has been cancelled.
A spokesperson for the HMRC said: ‘We have apologized to (David) for our mistake in his self-assessment bill. We have canceled the amount due, including any interest.
“We are looking closely at David’s case to see how we can improve our processes.”
Have you had a problem with HMRC or are you a disgruntled employee? Contact: editor@thisismoney.co.uk