A case came through to Tax Help for Older People, the beneficiary will remain anonymous but we will call him ‘Tony’. Tony received a tax demand from the HMRC and came to us for help.
We were able to help Tony with some simple understanding of his PAYE situation, allowing us to advocate on his behalf. Tony had always struggled with dyslexia, but had other difficulties with COPD, heart disease and peripheral vascular disease. He contacted us in June 2021 as he had received a letter showing a tax underpayment of £246 for the tax year 2019/20. This was a complete surprise. He wasn’t sure what he was supposed to do or why he had received this demand.
The underpayment was due to a coding error, because he had received his pension and had ongoing PAYE employment. When his pension had started no code had been issued in respect of his ongoing employment and as a result his employer continued to use his code from the previous year, meaning that he had underpaid his tax in the year his pension started. As this error on his code continued into 2020/21 it meant that his tax for the year 2020/21 would be underpaid and the error continued in 2021/22. Tony had a low income and was unable to pay the tax underpayment.
Tax Help made an appeal on the grounds of hardship due to Tony’s vulnerability and low income. HMRC agreed that, taking into account Tony’s personal circumstances, they would not look to collect his underpayment. HMRC also agreed this approach for the underpayment that arose in 2020/21 and Tax Help ensured that Tony’s codes for 2021/22 were correct so that he did not have to worry about this anymore. This is a simple fix for a simple coding error, but for Tony it was transformational, because the paperwork and terminology was impenetrable and he couldn’t pay.