to want to bang my head against a wall?

They're a nightmare, indeed. Before I retired, I took on a bit of freelance work, along with my main job. Attended to relevant tax forms, and paid tax due which I worked out with the help of a friend who used to work in accountancy. All was well - I thought. It's taken 2 years to sort it out and then I was sent a tax demand for £250. Apparently the Inland Revenue hadn't worked things out right, and my coding had been wrong once I began to receive State Pension. They were wrong, and admitted it, but I still had to pay the money to them, before the end of January.

IR is definitely not fit for purpose. Before my late husband died we received a letter from them stating he was due a tax refund. Within 2 weeks of his death I received another letter saying no refund was due. I had to pass this on to an accountant who sorted it out for me, at a cost.

I have recently returned from a trip to visit family in Australia and whilst there was talking to one of my brother's friends. He said he had received a letter from IR stating he owed them £40,000 tax in respect of work he had done 10 years ago. Despite writing to them stating he had been living in Australia for 35 years and had never returned to UK they still kept writing asking for the money. Eventually he had to ring them to get it sorted out.

Mine own misread the original - there is nothing owing headed - tax letter completely missing the bit underneath saying you now owe!!!! No commercial organisation could get away with such a badly written piece of rubbish. I so sympathise - on the up-side you have an Ipad which you would not have bought but would have sensibly paid the tax bill instead.

They once told my husband he owed £250,000 (I wish!) and it took about 6 months to get them to sort it out, meanwhile we continually got demands. Although we knew that it wasn't correct you do begin to worry that you will not be able to convince them!

Don't mention I.R. hubby had bill for £1,700 due to mix up between part-time employee's and pension allowances.

We managed to pay this off, and got an identical bill 2 wks after. Despite the amount being taken from our account. They can't get anything right

HMRC has been in meltdown ever since they were merged. The CEO has been called before a parliamentary committee to explain why he let Vodaphone (and other large companies) off millions of pounds of interest.
Self Assessment was simply a way of reducing the number of trained inspectors so your tax return is 'captured' by a clerk, who could easily key in a wrong number. The computer system is programmed to spot possible inconsistencies in accounts and then an inspector will mount an investigation.
I was able to advise business owners if they were failing to claim every possible allowance but I doubt if anybody is doing that now.

out of the blue the tax man said we owed them £2000-total rubbish when we argued-they have NO idea how they got there!
last year they sent me a cheque for about £500-i knew it was wrong but they knew nothing about it and then demanded it's immediate return(6 months later) so I asked for a stamp. Still waiting

When I did my online self assessment in January it said I didn't owe them anything. I've had nothing from them before about this amount so I don't know where they got it from. Spoke to them this afternoon and they insited I owed it so have paid it and will now try and sort it out. It was just the initial shock that sent me over the top!!

You need to contact the Collector of Taxes and make an arrangement to pay in instalments. They won't be able to tell you how the bill is made up - that is the Inspector of Taxes's job, and they just pass on the information to the Collector.
Unless things have changed dramatically since I retired, the HMRC are not keen on taking proceedings against tax payers - they would much rather come to an arrangement.
If you wish to contest the amount, ask for an appointment at your local tax office, if it is near enough. It is much easier to sort things out face to face. IN the last resort, the Inspector can take your case to the Commissioners, who are impartial arbiters.

Zephrine Revenue & Customs have been heavily criticised in the media for sending unnecessarily threatening letters to people who owe only small amounts of tax. (I realise that having just spent £500, a tax bill of £503 probably seems like a lot to you, but it's peanuts to them.) Just write to them, first seeking clarification is you don't understand why you owe this money and then, if you do owe it, offering to pay it in instalments that are comfortably within your ability.