Tax demand for year 2008/9 received March of this year - what to do??

Many years ago we got a sudden demand for several thousands of pounds of back taxes. We were both on PAYE and had no significant income from savings.

It was when husband and wive's incomes were taxed separately at basic rate but aggregated for higher tax levels and I had increased my hours and had a pay rise and we had crossed this boundary. We were completely unaware that HMRC got up to this wizard wheeze, otherwise we would have planned for it. However, that would have been fine if it had happened and we had been told the following year, but we were not informed of this for 5 years and then we were presented with the aggregated extra tax demand for the five years.

We got though, but it was very difficult.

I thought that I would post this senario as I'm sure it will be of interest - especially to those who might have a problem with their Tax.
I took up my son's case and after a lot of research on the internet and five letters later, I've just had notification that HRMC have reinvestigated his case and are refunding the full amount in question - nearly £2000!!
If you think that there has been an unjustified demand it pays to be patient and persistant. Patience certainly comes into the equation as letters don't get replied to quickly - 4-8 weeks is the norm.

Janeainsworth - in fairness a lot of self employed people don't pat tax until the January after the April end of tax year , so have the tax in their accounts for 19 months - and when you pay on account it is in january half way through the tax year, so is on what you have earned so far

My advice to anyone in this situation is go and pay for the finest tax accountant you can. HRMC wanted me to pay £2545 tax for PAYE (pensions) but my accountant argued the case, and won! Worth every penny!

Many thanks to you all for your comments. I do agree with you bluebell that if it's owing it should be paid. My son has actually paid up. It's just that I felt he was hard done by to be asked for this amount at such a late stage without having any earlier notification. I've heard that 45,000 similar demands have been sent out for the year 2008/9 and this is due to a new computer installation that has coughed up these deficits.

HMRC are a law unto themselves and although I agree with you in principle Bluebell it's possible to come unstuck even when you have acted honestly and in good faith.
I was self-employed for over 20 years, employed an accountant, paid my tax in full and on time every year.
I was surprised a few months ago to receive a demand from them for 'interest'.
I rang up and spoke to a very young man who explained that yes, I had certainly paid in full etc but HMRC had retrospectively revised the amount I should have paid, and therefore although I had paid the correct amount at the time, I now owed them interest on what they had later decided I should have paid. This was later reiterated in a fairly heated correspondence.
It turned out that my accountant had underestimated the amount I should have paid 'on account'. That means the tax that self employed people have to pay on money they haven't yet earned.
As it was only a small sum (£17.60) I just paid and didn't take it any further, but i felt it was quite wrong in principle that they can just alter assessments retrospectively like that. If it had been £176 or £1760 I would have been none the wiser and I would certainly have challenged it higher up the feeding chain.
It left me with the deep suspicion that HMRC are just trying it on with as many people as possible, over small amounts that are not going to be challenged, rather like criminals who manage to deduct 10p from millions of bank accounts - it all adds up to rather a nice sum.

Sadly gangy5 the tax office seem to do exactly what they like and really don't give a hoot about the impact of their actions . My son and daughter in law have had their tax credits stopped due to an overpayment in 2009. They are now desperately hard up and have three small children. My son has had his tax code reduced so he pays tax on every penny earned (he is on a small wage) and it looks like he is going to be off work for many weeks (possibly months) living on statutory sick pay. My DH has received a bill for £850 from 2009 and when he queried it they said they could not take it from his tax coding as he is already paying the most tax he can on his earnings due to a company vehicle. What really gets me is that the big companies and those at the top use every loop hole possible to get out of paying anything and those at the bottom get hounded to death.

susie I think you right in it being six years at one time as I had to claim for work expences,uniform cleaning and car payments interest etc I applied for the tax relief for 7 previous yrs and was allowed for 6 yrs they again sent all 6 cheques in different envelopes.The time span has been changed for a few years now I think.

If he gets a CCJ, his credit rating will be rock bottom.

Gangy - what you say means that someone on the deliberate fiddle who gets away with it, shouldn't pay up whilst honest people like me should pay every penny we owe( which we should)

Well what I have to say will make me very popular - I have been self employed for 14 years and have always worked out my own tax - it's hardly rocket science. I put away in a separate account what I know I owe and if asked for less , pay what is asked until they get their act together whilst leaving the balance in the account. When I was paye, I always checked my code - my responsibility - and again really easy. If your tax affairs are complicated, pay an accountant. When I think of the complexities of the benefits system, income tax is as nothing. So your son should check all his tax for the last four years ( as he should have been doing) if he's paid the right amount, he fights it and if he's underpaid, he should pay up as the rest of us have been doing.

County Court Judgement.

I think it used to be a 6yr limit but it's been changed to 4 - what is a CCJ susieb755 It's just that I think it unreasonable to dish this up nearly 4 years later!!

I thought it was a 6 year limit?

If he is on PAYE he could ask for his coding to be adjusted , as it would have been their error

if self employed they will say he should have worked out correctly himself on his self assessment - they may let him come to an arrangement..if he really cant pay, the check the rules, but it used ot be that if you let them take you to court for a CCJ then they cannot charge interest and you can make weekly payments, then pay for the CCJ to be removed once cleared

He's lucky to get the cheque in the same envelope as the letter, phoenix! I have had several miniscule tax rebates over the last few years, and each one has arrived in a separate envelope from the same department. The waste that goes on in government departments....

Phone them, they should be able say how they reached that figure.

However, be warned! They have multiple departments across the UK, and they don't seem to talk to each other.

Hence, one minute Mr P is getting letters saying he owes them money, then a few says later receives a letter with a cheque attached for a tax rebate!