HMRC has had to apologise 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 left reeling after he received a bill of more than £38,000 from HMRC despite usually being taxed at source through PAYE.
After the initial shock of receiving the bill, David tried to contact HMRC only to discover 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 get through to the tax office to appeal
David said this caused ‘considerable stress and worry’ because he was living off his military pension and his partner earns minimum wage working at a college.
HMRC has urged taxpayers to use its online chatbots as part of its digital push, but when David got in touch via this method he was told the team he needed 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 sorry saga.
When HMRC received his 2020/21 tax return, it concluded David had overpaid tax by nearly £8,000 which was refunded in October 2022.
But HMRC subsequently found that David had omitted a further income of over £40,000, which led to his income going over the £125,140 threshold. This cut his personal allowance to zero, meaning David had actually underpaid his tax bill by £388.75.
HMRC wrote to David in July 2023 informing him about the tax he owed, the amount he was incorrectly repaid in October 2022, and the interest incurred.
However, HMRC made an error and incorrectly said he owed £38,368.35. In fact, the number should have been £8,368.35.
It doesn’t end there, though.
After This is Money asked HMRC to investigate the case, they identified that David had in fact not omitted any information on his 2020/21 tax return.
The form – which was a paper submission – had included details of how much tax he had paid at source from his income in a separate question.
Due to an error on their part, the amount HMRC claimed David had omitted was incorrect.
Thankfully, the matter has now been resolved and all of the money the taxman claimed David owed has been cancelled.
An HMRC spokesman said: ‘We apologised to [David] for our error on his Self Assessment bill. We have cancelled the amount due, along with any interest.
‘We are looking carefully at [David’s] case to see how we can improve our processes.’
Have you had an issue with HMRC or are you a disgruntled employee? Get in touch: [email protected]
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