Posted on 23rd May 2018

A recent change to the way HMRC collects tax underpayments may lead to accidental double deductions.

During the 2017/18 tax year, HMRC amended their policy on collecting underpayments for the current period. Previously, if it was identified that someone was not paying enough tax, HMRC would wait until the end of the current tax year and collect the underpayment either through Self-Assessment or a future tax code.

The amendment means that HMRC started to collect any underpayments for the current year immediately, using the current tax code.

To achieve this, HMRC added an ‘In-Year Adjustment’ into the tax code. This lowers the tax code, but ensures that the taxpayer pays the correct amount of tax by the end of the year.

However, it has been noticed that HMRC are still using the end of year Self-Assessment to collect underpayment, meaning that they have collected it through both the tax code and the Self-Assessment. This is an error in HMRC’s computer system as it means the underpayment has been collected twice.

HMRC are aware of the issue and have apologised for any inconvenience caused, however, it can take up to four weeks for any additional repayment due to follow through.

If you’re not sure whether you’ve been affected by this change, or would like peace of mind that you have received any repayment owed to you, get in touch with us today. Our friendly team of experts can let you know whether you’re in line for a tax refund and deal with HMRC on your behalf, ensuring an efficient and stress-free process.