Accountancy firm Kingston Smith LLP has warned that a recent spate of P800 Tax Calculations issued by HM Revenue & Customs (HMRC) contain inaccurate income figures which are estimated, but are not declared to be so.
The P800 Tax Calculation tells you whether HMRC considers you have paid too much or too little tax in earlier tax years.
While many assume the figures it contains to be correct, the calculation is often based on the previous year's known sources of income, which could vary significantly from the actual figures.
Andrew Shaw, head of personal tax at Kingston Smith LLP, explains: "When taxpayers receive a letter on official HMRC paper detailing their tax liability, many naturally assume that the numbers are correct. Our experience shows that this is not always the case, often because some of the figures used represent last year's known income.
"While the earnings taxed under PAYE are usually correct, the figures indicating other sources of income are sometimes simply wrong. This can occur for any number of reasons - for example, if the taxpayer's dividends or bank interest have changed since the previous year, which is more likely than not."
Taxpayers who receive a P800 Tax Calculation should always check the numbers against their own records and notify HMRC immediately of any discrepancies.
P800 Tax Calculations are issued to individuals that HMRC believe have not paid the right amount of tax according to their records. It should not be issued to taxpayers who are registered for self assessment, although this has been known to occur.
