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19 Apr

Tax Reconciliation

The tax reconciliation is a new process started by HMRC. It is used for the majority of tax payers who are taxed under PAYE. This may include you or your relatives, as this reconciliation also covers those in receipt of the State Retirement Pension and private pensions.

The HMRC computer system is looking for any differences between the tax collected under PAYE and the amount due for the tax year to 5 April 2015. If any discrepancies are found then a form P800 will be issued which includes a tax computation.

If it has been found that you have overpaid tax for 2014/15 then a cheque for this tax refund should arrive about two week after you receive the form P800. Once you’ve checked that the tax computation on the P800 matches the figures shown on your P60 then you can cash this cheque.

If the system thinks you have not paid enough tax for 2014/15 you will also receive a form P800, showing the amount of tax they think is now due. Again you need to check the calculations. Some common problems include:

  • State Pension is an estimated figure, not the actual amount received

  • The value of benefits (e.g. company car or health insurance) are not as reported by your employer for 2014/15

  • The business expenses you claimed to be set against your income haven’t been deducted.

These problems can occur because of the timing of returns processed by HMRC, which may not be in line with the programme to issue P800 forms.

Another issue that has risen this year is the duplication of employment income, which would lead to an apparent underpayment of tax. This could happen because PAYE records submitted by employers are double counted by the HMRC computer system. If you believe the income on your P800 looks too high then get in contact with HMRC to get it corrected.

If you would like any advice on this then please get in touch.

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