Once you have sent in your tax return, HM Revenue and Customs (HMRC) processes that information. HMRC deals with tax returns on the basis of ‘process now, check later’.  If you file your return on-line, there are a few basic checks as you enter the figures; but this is no guarantee that the return is correct.

If you file on paper, HM Revenue and Customs put the information on to their computer system. At this stage the tax office may correct any ‘obvious mistakes or errors’ in the return. They will tell you if they make any corrections.

Sometimes they call to ask about figures if they think this will resolve a problem quickly. But the form is not checked beyond this.

All this has important practical implications. For example, if  someone makes innocent mistake on their return by putting a figure in the wrong box, HMRC may not spot the error. The error may mean that the wrong amount of tax is paid, or even that a refund is issued.  HMRC may later discover the error and ask for the additional tax; or for the refund to be repaid. In a ‘worst case’ scenario you may have a penalty to pay as well as the tax.

So it is very important to ensure your return is as a accurate as possible. You can do this by, for example:

• Taking advice before completing your return – especially for any new or unusual items. Ask HMRC using the self assessment helpline – 0845 900 0444; if you cannot afford to pay for professional advice, you may ask TaxAid for help
• Checking the return carefully before submission to HMRC. For example, have you entered all the tax deducted from your income? This could be from employment, a pension, savings or deductions under the Construction Industry Scheme. Are you figures for the correct year and in the right boxes?
• HMRC has a number of ‘toolkits to help reduce errors’. These are designed for tax advisers, but you may find some of them useful. Many are for specialist areas, but the ones on ‘business profits’, ‘private and personal expensiture’ and ‘property rental’ are likely to be of more general application. The toolkits can be found at http://www.hmrc.gov.uk/agents/prereturn-support-agents.htm
• Does the tax bill or refund seem reasonable? The on-line system will calculate the tax due just before you submit the return. If the bill is not what you expected, then re-check all the figures and check that you have all the figures in the right boxes. Check that your figures cover the right period and the correct number of months – particularly for new sources of income. If you file on paper and HMRC calculates the tax due, keep a copy of the return and check it when the tax bill arrives

HMRC later checks a small sample of tax returns in more depth, by selecting them for an enquiry.

Tax calculation mistakes and disagreements

If you think HMRC has not calculated your tax correctly, let them know. You can do this by telephone, or in writing. You could also take the calculation and the copy of your tax return to an HMRC Enquiry Centre if you prefer to speak to someone face to face.

There is no formal procedure to appeal, but you can object and ask for an explanation of their figure. If you find there are mistakes, write to your tax office pointing these out. Ask them to correct their calculation. If they do not do so within a reasonable period, you should write to complain.

It is quite easy for HMRC to miss an error when processing a tax return. Mistakes can also happen when information is being input into the computer system. So look carefully at any calculation you receive. If any of the figures are unexpected – too high or too low – ask your tax office to explain the figures, and check that there is no mistake.. If you don’t do this, you might overpay tax. Or you could be faced with an unexpected tax demand at a later date, when HMRC discovers its error.

If your tax office says that its calculation is correct, and you are unhappy about this, consider seeking personal tax advice to clarify matters. If you cannot afford to pay an accountant or tax adviser, you may ask TaxAid for help.  Please also read our Tax Debt guide to dealing with your tax bill.