Does HMRC Make Mistakes – and What Happens if they Do?

When you’re filling out your tax return, you double- and triple-check to make sure you don’t get anything wrong. Nobody wants to be in trouble with HMRC!

Of course, mistakes do happen, and you shouldn’t be penalised if a genuinely innocent error is discovered. But it can still mean a lot of stress and inconvenience, and you’ll have to pay any tax that’s been overlooked as a result of your slip.

But you’re not the only one who can get it wrong when it comes to tax. After all, HMRC is run by human beings, and humans make mistakes. In this post, we’ll take a brief look at the kind of errors that can affect you and your business, and how they are fixed.

Overpaid and underpaid tax

This is a very common issue. In fact, if it hasn’t already happened to you, you probably know at least one person that’s been affected.

In the best-case scenario, HMRC might have been charging you too much tax. Perhaps your circumstances have changed; maybe they have the wrong information on file, or they’ve simply miscalculated. In this case, you’ll receive a refund for the overpaid tax. Sometimes this is automatic, but sometimes you’ll need to apply for it yourself – which is why it’s important to keep a careful eye on your records.

The best way to avoid drawn-out, stressful and potentially costly issues – and missing out on a fat refund – is to stay on top of your finances. Even if you’re a sole trader, a tax advisor can save you time and money by heading off issues before they occur.

Gremlins in the system

Over- and underpayment is a consistent problem with HMRC, and a mistake can usually be traced back to a straightforward error. But sometimes things just go wrong for no reason in particular. Maybe it’s a blip in the IT system, a bit of paperwork that has slipped through the cracks, or plain old human error, such as inaccurate data entry.

This is a particular hazard when it comes to PAYE, where the wrong tax code or outdated information can result in an employee overpaying or underpaying for an extended period of time. But even self-employed people can end up being affected by the gremlins.

One thing’s for sure: if you’ve been paying too little tax, you’ll have to rectify that eventually. On the other hand, if you’re overpaying because you’ve missed out on claiming allowable expenses or tax relief, that can continue indefinitely unless you take proactive measures. And you can only make a claim for repayment within four years of the end of the relevant tax year, so you need to move fast.

Ultimately, the best way to ensure you pay the right amount of tax and stay in HMRC’s good books is to get professional help. Our friendly tax advisors can help you claim the right expenses, make sure your tax return is accurate, and talk to HMRC for you if necessary. Just contact us for a free, personalised quotation.