Tax Rebates & Refunds

Making sense of tax corrections

January 26, 2011
Posted in Income Tax — Written by Geoffrey

Not paying enough tax is referred to as ‘underpayment’ of taxes. When this happens, HM Revenues and Customs will communicate with you and determine why this has happened. They will also collect the owed tax amounts from you.

If your underpayment is less than £2,000

In these cases, HMRC will issue you with a new tax code and ask you to pay the amount owed within a year. You can make a ‘voluntary payment’ by paying off the taxes in a lump sum immediately.

For underpayments in excess of £2,000

If your underpayment is in excess of £2,000, then HMRC will ask to pay off the owed tax within a month or by 31st January after the end of tax year- whichever is later. HMRC may also make arrangements for you to pay your taxes back through the self assessment system.

If you do not have the money

You will need to write a letter to the tax office and explain to them the reasons for which you are unable to pay the owed amount. You will have to provide them with rough figures of your income, expenses, savings and other spending if any. You may also have to declare any assets under your possession. HMRC may then consider your situation and decide on the best course of action.

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