HMRC’s tax-coding debacle has created a terrible mess which will be causing widespread worry. Many people in a number of industries, including entertainment, are deemed to be ‘employees’ working for several different clients during a tax year and will be prime candidates to receive a letter from HMRC.
If you do receive a letter, do not despair. The first thing to remember is that the form P800 is not a demand, it is a calculation and can be challenged. If you have already provided full information and HMRC failed to use it, then the delay may be their fault and you could ask for the Extra Statutory Concession A19 to be applied which may mean you don’t have to pay. If you still have to pay, then you can ask for an ‘easy instalments’ arrangement to pay over a period of time.
If the calculation shows you are due a repayment, definitely don’t ignore it and make sure you obtain your refund. Individuals should always check their tax codes are correct and if they have any doubts, contact their local HMRC inspector or accountant to discuss how it is calculated. At the end of each tax year they should also carry out a calculation of the tax they should have paid and compare it to the amount deducted under PAYE, as shown on their P60 at the end of the year.
Finally, beware of scams – fraudsters are expected to target this potential goldmine with a vengeance!