P800: The annual reckoning

posted on September 18, 2019in the Blog Category

P800: The annual reckoning

Following the end of the tax year, HMRC carry out a reconciliation for anyone who received PAYE employment or pension income in that year but who was not in self assessment.  The reconciliation checks to see if, based on the information that HMRC hold, the taxpayer has paid the correct amount of tax for that year.  Reconciliations are also carried out for taxpayers not in PAYE but who receive a state pension that exceeds their personal allowance.

When their work for 2018-19 is complete HMRC estimate that 85% of those for whom a reconciliation is performed will have paid the correct amount of tax, 10% will be entitled to a refund and 5% will have underpaid.

The latter two groups will be issued with a P800, or potentially a PA302 where simple assessment applies, to correct the position.  The first wave of these annual reconciliations for 2018-19 landed on doormats from 17.6.19.

Given the vast numbers of taxpayer records, it takes HMRC some time to process and issue all the reconciliations.  They aim to complete the bulk of 2018-19 reconciliations by November 2019, with the final deadline to complete the operation for the most complex cases being March 2020.

Since nothing is issued unless the reconciliation throws up a discrepancy, a  taxpayer wondering whether HMRC have carried out a reconciliation can check by looking on their personal tax account.

When a P800 is received the taxpayer should check the data used in the calculations.  This will include making sure that any employment or pension income on the P800 matches supporting paperwork from the taxpayer’s employer; interest and dividend figures are correct and that any allowances such as marriage allowance or job-related expenses are included.  The Low Incomes Tax Reform Group provides helpful guidance on how to check a P800.

Appealing a P800 or PA302 

What happens if the taxpayer considers that their P800 is incorrect?

In the first instance they should contact HMRC to provide amended figures. Where any differences cannot be resolved the taxpayer cannot appeal against the P800 itself but can appeal against the new PAYE code that gives effect to the tax recovery.

In contrast, where a taxpayer receives a PA302, the simple assessment regime does include a right of appeal.  If HMRC will not accept the taxpayer’s initial objectives (which must be made within 60 days of the assessment) the taxpayer can appeal against a simple assessment demand.

AvatarWritten By: Mandi Mottershead

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