Telling the truth about SME life today

Guide To Handling HMRC Tax Errors and Mistakes

HMRC errors and mistakes guidance

HMRC, or the Her Majesty’s Revenue and Customs, is a government department in charge of taxation in the United Kingdom. They are responsible for overseeing the collection of taxes, as well as providing financial assistance to citizens and businesses. HMRC also plays a role in regulating certain economic activities and ensuring that businesses are properly registered.

While HMRC is generally a very-well run department, nobody is perfect – and that includes the UK’s tax authority. Even if you are meticulous in your bookkeeping, mistakes can still be made so where can you turn to for HMRC errors and mistakes guidance.

In this article, we will explain common HMRC mistakes, how you can challenge an error and much much more!

What are HMRC’s Many Functions?

HMRC is a vast organisation with many different functions. The main ones are as follows:

  • Tax collection – This includes income tax, corporation tax and capital gains tax
  • PAYE (pay as you earn) administration – This covers the payment of employees’ taxes through their salaries
  • National Insurance contributions – These are compulsory payments made by employees and employers and are used to fund state benefits such as the NHS
  • Customs and Excise duties – These are taxes levied on imported goods
  • Administration of Stamp Duty Land Tax – This is a tax paid on property purchases
  • Other miscellaneous functions – Such as regulating the alcohol and tobacco industries, and administering the government’s tax incentives and reliefs scheme

All of these are very important functions that contribute to the smooth running of the country. However, as with any large organisation, mistakes can sometimes be made.

Common HMRC Mistakes

One common mistake that HMRC makes is miscalculating taxes. This can happen for a variety of reasons, such as incorrect information being inputted into their system. If you believe that your tax bill is incorrect, you should contact HMRC as soon as possible so that they can investigate the matter and correct any errors.

Another common HMRC mistake is with PAYE, or Pay As You Earn. This is the system by which an employer calculates and deducts income tax and national insurance contributions from an employee’s wages. Sometimes, errors can be made in the calculation of these amounts, resulting in employees being over or underpaid. If you think that this may have happened to you, you should contact HMRC as soon as possible.

HMRC can also make mistakes with their computer systems. These errors can be the result of a programming error or an issue with the system itself. If you experience any problems with your tax return that cannot be resolved by speaking to HMRC directly, you may need to raise a formal complaint.

Operational errors are another type of mistake that HMRC can make. These can include things like sending out incorrect tax codes or losing important documents. If you think that HMRC has made an operational error, you should contact them as soon as possible so that they can rectify the situation.

If you believe that HMRC has made a mistake on your tax return, you have the right to challenge their decision. This is called a ‘notice of enquiry’. You will need to provide evidence to support your claim that HMRC has made an error. This could include things like bank statements or payslips.

What are the Consequences of HMRC Mistakes?

The consequences of HMRC mistakes can be wide-ranging and serious. For example, if you have been overcharged on your taxes, this could leave you out of pocket and in a difficult financial situation. Similarly, if PAYE errors have been made, this could result in you being unable to claim certain benefits or entitlements.

If HMRC has mistakenly found you to have underpaid on taxes, you may be liable for interest and penalties. This could end up costing you a significant amount of money. In some cases, HMRC may even take legal action against you.

HMRC errors can also have serious consequences for employers. If HMRC has made mistakes with PAYE, for example, employers may be liable for penalties and interest charges. They may also be required to reimburse money to employees which HMRC has mistakenly overpaid.

self-assessment tax mistakes

How to Challenge an HMRC Mistake

If you believe that HMRC has made a mistake on your tax return, you have the right to challenge their decision. This is called a ‘notice of enquiry’. You will need to provide evidence to support your claim that HMRC has made an error. This is very important because, without evidence, HMRC may not be willing to listen to your complaint.

You can raise a notice of enquiry by contacting HMRC directly. Once you have submitted your evidence, HMRC will review your case and make a decision. If they agree that an error has been made, they will correct it and issue you with a refund if necessary.

If you are not satisfied with HMRC’s decision, you can appeal their decision by writing to them within 30 days. This usually involves sending a written statement setting out your reasons for appealing, along with any evidence that you have. You can also ask for an oral hearing if you feel that this would be helpful.

What Evidence You Will Need

If you are going to challenge an HMRC decision, it is important that you have evidence to support your claim. This could include things like bank statements or payslips. You will need to make sure that your evidence is clear and concise so that HMRC can understand your complaint.

Keeping your financial records is very important for everyone, but particularly for self-employed people. Their taxes work differently to those in employment and HMRC may ask to see your records at any time. Self-employed taxes are paid through a system called ‘Self-Assessment’. This means that you are responsible for declaring your income and paying the correct amount of tax on it. You will also need to complete a self-assessment form each year. This is why it is so important to keep good, accurate records of your income and expenses because you will need them to complete this form.

If you have any questions about self-assessment, or if you need help completing your forms, you can contact HMRC directly

Common Employer Mistakes

As well as HMRC making an error, employers can also make a number of mistakes when it comes to PAYE. One common mistake is not issuing employees with the correct tax code. This can happen if an employer does not have up-to-date information about an employee’s circumstances.

Another common mistake is deducting the wrong amount of tax from employees’ wages. This can happen if an employer uses the wrong tax code or makes a mistake when calculating the tax due.

Employers may also make mistakes when it comes to reporting employee pension contributions. This can happen if an employer does not have the correct information about an employee’s pension scheme.

How to Rectify Them

If you are an employer and you have made a mistake with PAYE, you should contact HMRC as soon as possible. They will be able to help you rectify the error and avoid any penalties or interest charges.

It is also important to keep up-to-date with changes to tax law and HMRC guidance. This will help you to avoid making mistakes in the future. You can find the latest information on the HMRC website or by contacting them directly.

Potential Penalties

If you are an employer and you make a mistake with PAYE, you may be liable for penalties. The amount of the penalty will depend on how serious the mistake is and how long it has been since it was made.

Employers can also be penalised for not issuing employees with the correct tax code or for deducting the wrong amount of tax from their wages.

paying taxes

Common Employee Mistakes

As well as employers making mistakes, employees can also make a number of errors when it comes to their taxes. One common mistake is not declaring all of their income. This can happen if an employee does not keep accurate records of their earnings or if they forget to include some types of income on their tax return.

Another common mistake is claiming too much in expenses. This can happen if an employee is not sure what they can and cannot claim for, or if they deliberately try to claim more than they are entitled to.

Employees may also make mistakes when it comes to their National Insurance contributions. This can happen if they do not understand how the system works or if they forget to pay the correct amount.

How to Rectify Them

If you are an employee and you have made a mistake on your tax return, you should also contact HMRC as soon as possible. If you don’t, you may have to pay a penalty.

HMRC will usually give you the opportunity to amend your tax return if you have made an honest mistake. However, if they think you have deliberately tried to avoid paying tax, they may take further action. This could include prosecuting you or making you pay a higher rate of tax.

Potential Penalties

Employee tax mistakes can result in some serious penalties. The most common penalty is a fine, which can be up to 100% of the amount of tax that has been underpaid. Employees may also have to pay interest on any tax that has not been paid on time. This interest will be charged at a rate set by HMRC but will usually be around the Bank of England base rate plus an additional percentage.

How to Build a Good Relationship with HMRC

It is important to have a good relationship with HMRC if you want to avoid making mistakes with your taxes. This can be achieved by following the correct procedures and complying with all of their instructions.

As noted above, you should also stay up-to-date with changes to tax law or HMRC guidance so that you can to avoid future mistakes.

If you do make a mistake, it is important to contact HMRC as soon as possible and take steps to rectify the error. This will show that you are taking your tax responsibilities seriously and it may help to avoid any penalties or interest charges.

Tips for Doing Your Taxes

There are a number of things that you can do to make doing your taxes easier. One is to keep accurate records of all your income and expenses throughout the year. This will help you to complete your tax return accurately and without any stress. You should also familiarise yourself with the tax system and understand how it works. This will help you to make sure that you are paying the correct amount of tax.

If you need help with your taxes, there are a number of people who can assist you. These include tax lawyers, accountants and HMRC themselves.

Tax lawyers can provide you with advice on tax law and help you to resolve any disputes that you may have with HMRC. This is important because they can help you to avoid making mistakes that could result in penalties or interest charges.

Tax accountants can help you to prepare your tax return and make sure that you are paying the correct amount of tax. This will help you to avoid any errors that could result in you paying too much tax or mistakenly underpaying on your taxes.

HMRC themselves can also provide you with help and guidance on your taxes. They have a number of online resources that can be very helpful, such as their Self-Assessment Toolkit. You can also speak to an HMRC advisor by calling their helpline. They will be able to answer any questions that you have about your taxes and help you to avoid making mistakes.

pay taxes to HMRC

Final Thoughts

Making mistakes when it comes to your taxes can be costly and stressful. However, by following the correct procedures and taking advice from professionals, you can reduce the chances of making any errors. However, if you think that HMRC has made an error, there are ways to challenge them. We hope this guide to HMRC errors and mistakes guidance has been useful and has answered many of your questions. If you still have any queries, get in contact with HMRC themselves and they will be able to help you.

Trending

Topic

Related Stories

More From

Trending

If you enjoyed this article,
why not join our newsletter?

We promise only quality content, tailored to suit what our readers like to see!