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HMRC are continuing their usual 2010/11 end-of-year PAYE reconciliations and, having sent out overpayment letters at the end of the summer, the department is now issuing letters to taxpayers who have underpaid tax.
Extra-statutory concession A19 will not apply to underpayments because they are within the timeframe for the Revenue to issue demands for reimbursement. The underpayments, where they amount to less than £3,000, will be included in the taxpayer’s PAYE code.
An HMRC spokesperson confirmed the January assertion by Exchequer secretary David Gauke, in a written parliamentary statement, that the taxman would not issue more underpayment calculations for the years prior to 2007/08.
With regard to the 2010/11 PAYE reconciliation, the spokesperson claimed the Revenue ‘paid out £680 million to 2.3 million customers [sic] during the summer’.
The Revenue has been working with pensioner representatives and will ‘shortly be writing to 146,000 pensioners who have not paid enough tax during 2010/11’.
The pensioners, many of whom found their state pension was not included in their 2010/11 PAYE codes, are some of the 1.2 million taxpayers who underpaid tax; calculations will be sent from the end of October.
According to the spokesperson, the department has ‘already made it clear that we will not pursue underpaid tax on the state pension cases from before 6 April 2010, and [we] have put these customers [sic] on the right footing for 2011/12 by including the state pension in their tax code.
‘Where a pensioner has underpaid tax for 2010/11, we will automatically code out that underpayment over a period of three years from April 2012 without them needing to contact us. We will also write to these customers to apologise, explain why the underpayment happened and how we will collect it.’
HMRC plan to use their recently installed National Insurance and PAYE service (NPS) ‘to sort out remaining open cases from 2007/08 and earlier’.
There is also ‘a rump [sic] of cases from 2008/09 and 2009/10 that need manual intervention’, although the Revenue anticipates that ‘most of these will balance and won’t have any tax implications’.
