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Tax Tip

One million people have underpaid - to the tune of £600 each. 17/10/11

One million people will receive letters in the next few months notifying them that they have paid too little tax, this follows the now annual check to make sure the amount of tax and National Insurance deducted by employers matches its records, as carried out by Her Majesty's Revenue and Customs (HMRC)
The average amount owed is expected to be between £500 and £600, an HMRC spokesman said. Those affected will be able to pay the amount back in stages, if necessary, by either having their tax code adjusted or coming to an agreement with the HMRC.
However, six (6) million people are set to receive tax rebates of around £300 each. The process to credit those who paid too much tax in the 2007/8 year, or earlier, will take longer but HMRC hopes to have it completed by December 2012.
The HMRC spokesman said: "The fact is there will always be some cases at the end of every tax year that require an under or overpayment to balance but these cases will reduce as the new system beds in."
Last year, HMRC identified 4.3 million people who were due refunds for overpayments and some 1.4 million who owed the taxman after paying too little.
The House of Commons Public Accounts Committee criticised HMRC's management of the income tax system.
The MPs said up to 22 million people had not been taxed accurately since 2004-05 causing "unacceptable uncertainty and inconvenience".
HMRC Permanent Secretary Dave Hartnett was widely criticised last year for a lack of sympathy towards those facing an unexpected bill, after he said tax reconciliation was a routine measure.
He later apologised and insisted HMRC did "not underestimate the distress caused to taxpayers".
If you need any help and advice with your Tax compliance, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar NOW to discuss how ABDS can help in all your financial planning and business advice.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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