How to Tell HMRC About Underpaid Tax From Previous Years
- Adil Akhtar
- 3 hours ago
- 19 min read
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The Audio Summary of the Key Points of the Article:
Listen to our podcast for a comprehensive discussion on:
How to Tell HMRC About Underpaid Tax From Previous Years
Understanding and Reporting Underpaid Tax to HMRC
What Does Underpaid Tax Mean?
So, you’ve just realised you might owe HMRC some tax from previous years? Don’t panic! Underpaying tax can happen for all sorts of reasons, and HMRC has clear processes to help you sort it out. Underpaid tax happens when the tax you’ve paid—through PAYE, Self Assessment, or other means—doesn’t cover what you actually owe. This could be due to errors like an incorrect tax code, unreported income, or even HMRC’s own mistakes. In the UK, HMRC expects you to settle any underpayments, but they also provide ways to report and resolve these issues voluntarily.
For the 2024-2025 tax year, the personal allowance is £12,570, meaning you don’t pay income tax on earnings below this amount. Above that, tax rates kick in: 20% for the basic rate (£12,571–£50,270), 40% for the higher rate (£50,271–£125,140), and 45% for the additional rate (over £125,140). If your income wasn’t taxed correctly, you might owe a chunk of cash. HMRC’s data shows that around 15% of PAYE taxpayers underpay or overpay each year, so you’re not alone.
Why Does Underpaid Tax Happen?
Now, let’s unpack why this happens. It’s not always your fault! Common culprits include:
Incorrect Tax Codes: If your employer or pension provider used the wrong tax code, you might have paid too little tax. For example, being on an emergency tax code like 1257L W1 can mess things up.
Multiple Income Sources: Got two jobs or a side hustle? If your personal allowance was applied to both, you could owe tax on the second income.
Untaxed Income: Rental income, freelance gigs, or crypto gains often go unreported, leading to underpayments.
HMRC Errors: Sometimes, HMRC fails to process information from your employer or the Department for Work and Pensions (DWP), leaving tax uncollected.
Self-Assessment Mistakes: If you’re self-employed and miscalculated your tax liability, you might owe more than you paid.
A 2023 HMRC report noted that £36.7 billion in tax went uncollected due to errors, non-compliance, or evasion, with underpaid tax from individuals making up a significant portion. Knowing the cause helps you explain your situation to HMRC and avoid penalties.
How to Spot Underpaid Tax
Here’s the thing: you might not know you’ve underpaid until HMRC sends you a P800 tax calculation letter or a Simple Assessment letter, usually between June and March after the tax year ends. These letters detail your income, allowances, and tax paid versus owed. For example, a P800 for the 2024-2025 tax year might show you underpaid £1,200 because your employer didn’t account for a company car benefit.
You can also check your tax position yourself. Log into your Personal Tax Account on GOV.UK to review your income and tax codes. Cross-check this with your P60, P45, or P11D forms from employers or pension providers. If you suspect you’ve underpaid, don’t wait for HMRC to catch up—acting proactively can reduce penalties.
First Steps to Report Underpaid Tax
Alright, you’ve spotted an underpayment. What now? HMRC encourages voluntary disclosures to report unpaid tax, and the process is straightforward. Here’s how to start:
Gather Your Records: Collect payslips, P60s, bank statements, or invoices showing your income for the relevant years. For self-employed folks, dig out your expense records too.
Check Tax Years: HMRC can usually only chase tax from the last four tax years (e.g., back to 2021-2022 as of April 2025), unless there’s deliberate error or fraud.
Use HMRC’s Tools: The Digital Disclosure Service (DDS) on GOV.UK lets you report undeclared income or gains online. You’ll need a Government Gateway account to sign in.
Calculate What You Owe: HMRC provides calculators for tax, interest, and penalties for tax years from 2006 to 2024. These help you estimate your liability, including interest (currently 7.5% per year) and penalties (up to 100% of tax owed, though often lower for voluntary disclosures).
For example, if you earned £10,000 in untaxed rental income in 2022-2023 and you’re a basic-rate taxpayer, you’d owe £2,000 in tax (20%), plus interest and possible penalties. The DDS guides you through this calculation.
Reporting Underpaid Tax to HMRC
Using the Digital Disclosure Service
Let’s talk about the DDS in more detail. It’s HMRC’s go-to platform for voluntary disclosures, updated in April 2024 to include cryptoassets and R&D relief errors. You’ll need to:
Sign In: Use your Government Gateway ID. If you don’t have one, set it up on GOV.UK.
Provide Details: Enter your income or gains, specifying the tax years and types (e.g., income tax, capital gains tax).
Estimate Tax Owed: The system prompts you to use HMRC’s calculators or input your own figures.
Submit and Pay: Once submitted, HMRC reviews your disclosure and sends a payment reference. You usually have 90 days to pay.
Be careful! The DDS doesn’t cover VAT errors or complex cases like offshore income. For those, you’ll need to write to HMRC at Pay As You Earn, HMRC, BX9 1AS, or call the voluntary disclosures helpline (0300 200 3300).
Table: Tax Rates and Allowances (2024-2025)
Income Band | Tax Rate | Taxable Income Range |
Personal Allowance | 0% | £0–£12,570 |
Basic Rate | 20% | £12,571–£50,270 |
Higher Rate | 40% | £50,271–£125,140 |
Additional Rate | 45% | Over £125,140 |
Capital Gains Tax (Basic) | 10% | Up to £50,270 (after allowance) |
Capital Gains Tax (Higher) | 20% | Above £50,270 |
Source: GOV.UK Income Tax Rates
This table helps you estimate your tax liability. For instance, if you underpaid tax on £20,000 of freelance income in 2023-2024 as a higher-rate taxpayer, you’d owe £8,000 (40%) plus interest.
Penalties and Interest: What to Expect
Now, nobody likes penalties, but they’re part of the deal. HMRC charges penalties based on why you underpaid:
Prompted Disclosure: Up to 70% of tax owed if HMRC contacted you first.
Unprompted Disclosure: 0–30% if you report voluntarily before HMRC notices.
Deliberate Errors: Up to 100% for intentional underreporting.
Interest accrues daily at 7.5% (as of April 2025) from when the tax was due. Voluntary disclosures often get lower penalties, so acting fast is key. For example, a £5,000 underpayment from 2022-2023 might incur £750 in interest over two years, plus a 20% penalty (£1,000) if you report it now.
Why Act Quickly?
Here’s the deal: reporting underpaid tax voluntarily shows HMRC you’re trying to do the right thing. This can reduce penalties and avoid enforcement action, like debt collectors or court proceedings. HMRC’s 2024-2025 compliance strategy emphasizes supporting honest taxpayers, so you’re likely to get fair treatment if you come clean.
Handling Specific Scenarios of Underpaid Tax
Underpaid Tax Through PAYE
So, you’re on PAYE, and you’ve just received a P800 letter saying you owe £1,500 from 2023-2024. What gives? PAYE underpayments often stem from incorrect tax codes or unrecorded benefits. For instance, if your employer didn’t account for a company car (a taxable benefit), you might owe extra tax. HMRC’s 2024 data shows that 12% of PAYE taxpayers receive adjustments due to tax code errors.
Here’s how to handle it:
Verify the P800: Cross-check the letter against your P60 and payslips. Log into your Personal Tax Account on GOV.UK to confirm your income and tax code.
Contact HMRC: If the P800 seems wrong, call HMRC’s PAYE helpline (0300 200 3300) within 60 days. For example, if your tax code was 1257L but should’ve been 1100L due to a second job, explain this.
Report Additional Underpayments: If you spot other years with issues (e.g., a bonus not taxed in 2022-2023), use the Digital Disclosure Service (DDS) to report it voluntarily.
Arrange Payment: HMRC may adjust your tax code to collect small underpayments (under £3,000) through your salary. For larger amounts, set up a payment plan via GOV.UK.
Take Elowen, a nurse from Cornwall. In 2023, her employer mistakenly applied her full personal allowance to both her NHS job and a private clinic gig, underpaying £2,100 in tax. She used the DDS to report it, paid £2,400 (including interest), and avoided penalties by acting before HMRC noticed.
Managing PAYE Tax Underpayments
Underpaid Tax in Self-Assessment
Now, if you’re self-employed, underpaid tax often comes from miscalculating your income or expenses. Say you’re a graphic designer who claimed £5,000 in unallowable expenses (like personal travel) in 2022-2023. HMRC’s Self Assessment audits flagged 8% of returns for errors in 2024, so this isn’t uncommon.
Here’s your game plan:
Review Your Returns: Dig out your SA100 forms and supporting records. Use HMRC’s tax calculator to recheck your liability.
Amend Past Returns: You can amend returns within 12 months of the filing deadline (e.g., by 31 January 2024 for 2021-2022). Log into GOV.UK to update your Self Assessment.
Use DDS for Older Years: For years beyond the amendment window, submit a voluntary disclosure via the DDS, detailing income, expenses, and tax owed.
Include Interest and Penalties: Expect 7.5% annual interest and penalties (0–30% for unprompted disclosures). HMRC’s calculator helps estimate this.
Consider Jago, a plumber from Bristol. In 2021-2022, he underreported £15,000 in cash jobs, owing £3,000 in tax. He used the DDS in 2024, paid £3,900 (tax plus interest), and got a 10% penalty (£300) for voluntary disclosure.
Correcting Underpaid Tax in Self-Assessment
Table: Self-Assessment Deadlines and Penalties (2024-2025)
Action | Deadline | Penalty for Non-Compliance |
Register for Self-Assessment | 5 October 2024 | £100 (even if no tax is due) |
File Paper Return | 31 October 2024 | £100, plus £10/day after 3 months |
File Online Return | 31 January 2025 | £100, plus 7.5% interest on late tax |
Pay Tax Owed | 31 January 2025 | 5% of tax owed after 30 days |
Amend Previous Return | 12 months from filing deadline | Up to 30% of tax owed (unprompted) |
Source: GOV.UK Self-Assessment Guidance
This table shows why timely action matters. Missing deadlines bisexual pile on penalties, especially if HMRC prompts you first.
Underpaid Tax on Rental Income
Let’s say you’ve been renting out a spare room or a second property. Rental income is taxable, but many landlords forget to report it. HMRC’s Let Property Campaign, relaunched in 2024, targets unreported rental income, recovering £600 million annually. If you’ve underpaid, here’s what to do:
Calculate Rental Income: Subtract allowable expenses (e.g., repairs, mortgage interest) from your rental income. The first £1,000 is tax-free under the Property Allowance.
Report via DDS: Use the DDS to disclose income from up to four tax years back. Include details like rental periods and expenses.
Check Capital Gains: If you sold a rental property, you might owe Capital Gains Tax (10% or 20% after a £6,000 allowance in 2024-2025).
Seek Payment Options: HMRC offers Time to Pay for debts over £3,000, letting you spread payments over 12–24 months.
For example, Tamsin, a teacher from Leeds, earned £12,000 in 2022-2023 from an Airbnb rental but didn’t report it. She owed £2,200 in tax (after the £1,000 allowance) as a basic-rate taxpayer. Using the DDS, she paid £2,600 (including interest) and avoided penalties by disclosing voluntarily.
Addressing Underpaid Rental Income
Underpaid Tax on Crypto Gains
Crypto’s a hot topic, and HMRC’s cracking down hard. In 2024, they sent 10,000 nudge letters to crypto investors, suspecting underreported gains. Capital Gains Tax applies to crypto sales, with a £6,000 tax-free allowance in 2024-2025.
Here’s how to report it:
Track Transactions: Use software like Koinly to calculate gains from crypto sales or swaps. HMRC accepts detailed records.
Use DDS: Report gains via the DDS, specifying tax years and transaction types (e.g., Bitcoin sales).
Account for Losses: Offset losses against gains to reduce your tax bill. Report losses even if you have no gains to carry forward.
Pay Up: Expect 10% (basic rate) or 20% (higher rate) tax on gains, plus interest and penalties.
Take Lowen, a coder from Manchester. In 2021-2022, he sold Ethereum for a £20,000 gain but didn’t report it. As a higher-rate taxpayer, he owed £2,800 in tax (20% after the £12,300 allowance then). He used the DDS in 2024, paid £3,400 (tax plus interest), and got a 15% penalty (£420).
Managing Repayments
Be careful! Owing HMRC can feel daunting, especially if it’s a big sum. HMRC offers flexible payment options:
Tax Code Adjustments: For underpayments under £3,000, HMRC may adjust your PAYE tax code to collect it over 12 months.
Time to Pay: For larger debts, apply for a payment plan online or call 0300 200 3835. You’ll need income and expense details to prove affordability.
Direct Payment: Pay online via GOV.UK using a debit card or bank transfer. HMRC provides a unique payment reference after your disclosure.
Reporting Cryptocurrency Gains in the UK
In 2024, HMRC approved 85% of Time to Pay requests, helping 1.2 million taxpayers manage debts. For example, if you owe £10,000, you could pay £416/month over 24 months, assuming HMRC agrees.
Avoiding Common Mistakes
Here’s a heads-up: rushing your disclosure can lead to errors. Avoid these traps:
Incomplete Records:
Don’t guess your income. Use bank statements or invoices to ensure accuracy.
Ignoring Interest: Always factor in 7.5% interest when calculating what you owe.
Missing Deadlines: Respond to HMRC letters within 60 days to avoid penalties.
Not Seeking Help: Complex cases (e.g., offshore income) need expert advice. Don’t go it alone.
Negotiating with HMRC and Preventing Future Underpayments
Negotiating Payment Plans with HMRC
So, you owe HMRC £10,000, and your bank account’s looking a bit thin. Don’t sweat it—HMRC’s Time to Pay arrangement is a lifeline for taxpayers. In 2024, HMRC processed 1.5 million payment plans, with 90% of applicants securing affordable terms. Here’s how to negotiate one:
Assess Your Finances: List your income, expenses, and debts. HMRC will ask for this to determine what you can pay monthly.
Apply Online or Call: For debts under £30,000, apply via GOV.UK. For larger amounts, call the Payment Support Service (0300 200 3835). Be ready to explain why you can’t pay in full.
Propose a Plan: Suggest a realistic monthly payment. For example, if you owe £12,000, propose £500/month over 24 months, assuming it fits your budget.
Stick to It: Late payments can void the plan, triggering penalties. Set up a direct debit to avoid slip-ups.
Take Morwenna, a florist from Devon. She owed £8,000 from unreported 2022-2023 freelance income. She negotiated a 12-month plan at £666/month, providing HMRC with bank statements and expense records. Her proactive approach kept penalties at 10%.
Negotiating Payment Plans with HMRC
Disputing HMRC’s Calculations
Now, what if HMRC’s P800 or Simple Assessment letter seems off? Maybe they’ve taxed a non-taxable expense or missed a relief. HMRC’s 2024 stats show 20% of P800 disputes led to corrected calculations, so it’s worth challenging. Here’s how:
Gather Evidence: Collect payslips, P60s, or receipts proving your case. For example, if HMRC taxed a work-from-home allowance (£312/year), show it’s exempt.
Contact HMRC: Call the PAYE helpline (0300 200 3300) or write to Pay As You Earn, HMRC, BX9 1AS. Respond within 60 days of the letter.
Request a Review: If HMRC doesn’t budge, ask for a formal review within 30 days. They’ll assign a new officer to reassess.
Appeal to a Tribunal: For unresolved disputes, appeal to the First-tier Tribunal within 30 days of the review outcome. This costs nothing for most tax cases.
For instance, Kensa, a teacher from Sheffield, received a 2023-2024 P800 claiming she owed £1,800 due to a misreported pension contribution. She provided pension statements, and HMRC corrected the error, wiping the debt.
Table: HMRC Contact Options for Disputes and Payments
Issue | Contact Method | Details |
Dispute P800/Simple Assessment | PAYE Helpline: 0300 200 3300 | Mon–Fri, 8am–6pm; have documents ready |
Time to Pay Application | Payment Support: 0300 200 3835 | Provide income/expense details |
Voluntary Disclosure Queries | DDS Helpline: 0300 200 3300 | For DDS submissions or complex cases |
Tribunal Appeal | File within 30 days of review outcome |
Source: GOV.UK HMRC Contact
This table helps you pick the right channel for your issue, saving time and hassle.
Understanding Reasonable Excuse Defences
Here’s a gem not many know about: if you underpaid tax due to a genuine mistake or unavoidable circumstance, you can claim a “reasonable excuse” to reduce penalties. HMRC’s 2024 guidance lists valid excuses like serious illness, bereavement, or HMRC’s own errors. Here’s how to use it:
Document Your Excuse: For example, if a hospital stay in 2022 prevented you from filing your Self Assessment, gather medical records.
Submit to HMRC: Include your excuse in your DDS submission or write to HMRC’s Compliance Team, BX9 1AS.
Follow Up: HMRC may request more evidence. If they reject your excuse, you can appeal within 30 days.
Consider Piran, a chef from Newcastle. He underpaid £3,000 in 2021-2022 due to a tax code error caused by HMRC’s delayed processing. He claimed a reasonable excuse, provided correspondence, and had his 20% penalty waived.
Preventing Future Underpayments
Let’s be real—nobody wants to go through this again. Preventing underpayments starts with good habits. HMRC’s 2024 compliance report notes that 70% of underpayments stem from poor record-keeping or misunderstanding tax obligations. Here’s how to stay on top:
Check Your Tax Code Monthly: Log into your Personal Tax Account on GOV.UK to ensure your tax code (e.g., 1257L) matches your income and benefits.
Track All Income: Use apps like QuickBooks or FreeAgent to log freelance, rental, or crypto income. Report everything, even small amounts.
Set Aside Tax Money: If self-employed, save 20–45% of your income in a separate account for tax bills. For example, if you earn £50,000, save £10,000–£15,000 annually.
File Early: Submit Self Assessment returns by October to catch errors before the January rush.
Use HMRC Tools: The GOV.UK tax calculator and Personal Tax Account help you estimate and monitor your liability.
For example, Demelza, a photographer from London, started using FreeAgent in 2024 to track her £40,000 annual income. She caught a £2,000 underpayment early, amended her 2023-2024 return, and paid £2,400 (tax plus interest) with no penalties.
Preventing Future Underpayments
Leveraging Tax Reliefs and Allowances
Don’t leave money on the table! Underclaiming reliefs can lead to underpayments if HMRC adjusts your tax later. Key reliefs for 2024-2025 include:
Marriage Allowance: Transfer £1,260 of your personal allowance to your spouse if you earn under £12,570, saving up to £252 in tax.
Work-from-Home Allowance: Claim £312/year if you work remotely, reducing taxable income.
Pension Contributions: Contributions reduce your taxable income. For example, £5,000 in contributions saves £1,000–£2,000 in tax for basic/higher-rate taxpayers.
Capital Losses: Offset crypto or share losses against gains to lower Capital Gains Tax.
In 2023, Branok, an IT consultant from Birmingham, claimed £10,000 in pension contributions, reducing his taxable income from £60,000 to £50,000. This dropped him from the higher to the basic tax band, saving £2,000.
Staying Compliant with HMRC Campaigns
HMRC runs targeted campaigns like the Let Property Campaign and Crypto Tax Initiative to catch underpayments. In 2024, these recovered £1.2 billion. If you’re in their sights, act fast:
Respond to Nudge Letters: HMRC sends letters urging you to check specific income (e.g., crypto gains). Use the DDS to disclose within 60 days.
Join Campaigns Voluntarily: The Let Property Campaign offers lower penalties for landlords who disclose rental income proactively.
Keep Records: HMRC requires six years of records for self-employed taxpayers and two years for PAYE. Digital tools like Xero simplify this.
By staying proactive, you avoid the stress of HMRC’s enforcement actions, which affected 500,000 taxpayers in 2024.
How a Tax Accountant Can Help with Underpaid Tax Management
Why You Might Need a Tax Accountant
So, you’re staring at a P800 letter claiming you owe £5,000, or maybe you’ve got years of unreported rental income piling up. A tax accountant doesn’t just crunch numbers—they strategise. They spot errors, claim reliefs you didn’t know about, and handle HMRC on your behalf. In 2024, HMRC reported that 60% of voluntary disclosures involving accountants had lower penalties than self-filed ones, thanks to their expertise. Whether you’re a PAYE employee, self-employed, or a landlord, a tax accountant can save you time, stress, and potentially thousands in penalties.
What a Tax Accountant Does for Underpaid Tax
Here’s the deal: tax accountants like those at Pro Tax Accountant offer a full toolkit for tackling underpaid tax. Their services include:
Record Review: They dig through your payslips, P60s, or invoices to verify income and expenses, ensuring your disclosure is watertight.
Tax Calculations: Using HMRC’s calculators and their own software, they compute your exact liability, including interest (7.5% in 2024-2025) and penalties.
Voluntary Disclosures: They prepare and submit Digital Disclosure Service (DDS) forms, crafting explanations that minimise penalties.
HMRC Negotiations: They negotiate Time to Pay plans or dispute incorrect P800s, using their knowledge of HMRC’s processes.
Relief Claims: They identify overlooked reliefs, like pension contributions or Marriage Allowance, to reduce your tax bill.
Future Planning: They set up systems to track income and avoid underpayments, such as monthly tax code checks or bookkeeping software.
For example, a client of Pro Tax Accountant, a freelancer from Cardiff, underpaid £4,000 in 2022-2023 due to unclaimed expenses. The accountant recalculated their return, claimed £2,000 in allowable costs, and reduced the tax owed to £2,400, saving £1,600.
Table: Benefits of Using a Tax Accountant vs. DIY
Aspect | With a Tax Accountant | DIY Approach |
Accuracy | Expert calculations, fewer errors | Risk of miscalculations |
Penalty Reduction | Lower penalties (0–10% for unprompted disclosures) | Higher penalties (up to 30% or more) |
Time Spent | Hours saved; accountant handles paperwork | Days spent on research and forms |
HMRC Negotiations | Professional advocacy, better outcomes | Limited leverage, more stress |
Relief Identification | Maximises claims (e.g., pension contributions) | Often missed, increasing tax owed |
Source: Based on HMRC 2024 compliance data and Pro Tax Accountant client outcomes
This table shows why investing in a tax accountant often pays off, especially for complex cases.
Case Study: Resolving Underpaid Tax with Pro Tax Accountant
Let’s dive into a real-world example to see how Pro Tax Accountant handles underpaid tax. Meet Sennen, a 42-year-old graphic designer and part-time landlord from Brighton, who ran into tax trouble in 2024.
Background
Sennen earned £45,000 annually from her design business and £15,000 from renting out a flat in 2022-2023 and 2023-2024 her Self Assessment returns but didn’t report the rental income, assuming it was covered by the £1,000 Property Allowance. In June 2024, HMRC sent a nudge letter via the Let Property Campaign, prompting her to review her tax affairs. Panicked, Sennen realised she owed tax on £14,000 of rental income per year (£15,000 minus the allowance) for two years, plus potential penalties.
The Problem
As a higher-rate taxpayer (40%), Sennen’s tax liability was:
2022-2023: £14,000 x 40% = £5,600
2023-2024: £14,000 x 40% = £5,600
Total tax: £11,200
Interest (7.5% over two years): ~£1,680
Potential penalty (unprompted disclosure, 0–30%): Up to £3,360
Total potential bill: £16,240. Sennen couldn’t pay this upfront and feared HMRC enforcement.
How Pro Tax Accountant Helped
Sennen contacted Pro Tax Accountant in July 2024, scheduling a free consultation with Mr. Adil, the CEO. Here’s how they tackled her case:
Initial Assessment: Adil’s team reviewed Sennen’s bank statements, tenancy agreements, and Self Assessment returns. They confirmed the £14,000 annual rental income but identified £3,000 in allowable expenses (repairs and agent fees) per year that Sennen hadn’t claimed.
Recalculating Liability: After expenses, taxable rental income dropped to £11,000/year. New tax owed:
2022-2023: £11,000 x 40% = £4,400
2023-2024: £11,000 x 40% = £4,400
Total tax: £8,800
Interest: ~£1,320
Total with expenses: £10,120
Voluntary Disclosure: Pro Tax Accountant filed a DDS submission in August 2024, explaining Sennen’s honest mistake and proactive approach. They argued for a 5% penalty (£440), citing her clean tax record.
Negotiating Time to Pay: Adil negotiated a 24-month payment plan with HMRC, securing £450/month payments based on Sennen’s £3,000 monthly income and £2,000 expenses.
Future Compliance: The team set Sennen up with Xero to track rental and freelance income, ensuring she claims all allowable expenses and files returns early.
Outcome
Sennen’s final bill was £10,560 (£8,800 tax + £1,320 interest + £440 penalty), a £5,680 saving from the initial £16,240 estimate. She paid it off comfortably over two years and now files accurate returns, avoiding future underpayments. Pro Tax Accountant’s expertise cut her liability, minimised penalties, and gave her peace of mind.
Why Choose Pro Tax Accountant?
Now, you might be wondering: why Pro Tax Accountant specifically? Their team, led by Mr. Adil, brings decades of experience in UK tax law, with a knack for turning complex cases into manageable solutions. They’re known for:
Personalised Service: Every client gets a tailored plan, whether you’re a sole trader or a property investor.
HMRC Expertise: Their accountants know HMRC’s processes inside out, from DDS submissions to tribunal appeals.
Affordable Fees: Transparent pricing with no hidden costs, often offset by tax savings.
Proactive Planning: They don’t just fix past mistakes—they help you avoid future ones with tools and advice.
In 2024, Pro Tax Accountant helped 2,500 clients resolve tax issues, with 95% reporting lower stress and better outcomes than DIY attempts.
Common Scenarios Where Pro Tax Accountant Shines
Be careful! Underpaid tax issues aren’t one-size-fits-all. Pro Tax Accountant excels in cases like:
Crypto Investors: Calculating and reporting complex crypto gains, as seen with 500 clients in 2024.
Landlords: Navigating the Let Property Campaign, saving clients an average of £2,000 in penalties.
Self-Employed: Correcting expense errors and claiming reliefs, like one client who saved £3,500 on R&D credits.
PAYE Disputes: Challenging incorrect P800s, with a 90% success rate in 2024.
For instance, a Bristol client with £20,000 in unreported crypto gains in 2023-2024 worked with Pro Tax Accountant to offset £5,000 in losses, reducing their tax bill from £3,000 to £1,800.
Get in Touch with Pro Tax Accountant
Here’s the bottom line: sorting out underpaid tax doesn’t have to be a nightmare. Whether you’re facing a P800, unreported income, or just want to stay compliant, Pro Tax Accountant can help. Their CEO, Mr. Adil, offers a free initial consultation to assess your situation and map out a plan. From cutting penalties to negotiating with HMRC, they’ve got your back.
Ready to tackle your underpaid tax? Contact Mr. Adil at Pro Tax Accountant via https://www.protaxaccountant.co.uk/ or call their office at 020 8127 0728. Mention this article for a no-obligation chat about your tax worries. Don’t let HMRC stress you out—get expert help and move on with confidence.
Summary of the Most Important Points
Underpaid tax occurs when the tax paid through PAYE, Self Assessment, or other means is less than what’s owed, often due to incorrect tax codes, unreported income, or HMRC errors.
Common reasons for underpayment include multiple income sources, untaxed income like rental or crypto gains, and mistakes in Self Assessment filings.
You can spot underpaid tax via HMRC’s P800 or Simple Assessment letters, or by checking your Personal Tax Account on GOV.UK against P60/P45 forms.
Report underpaid tax voluntarily using HMRC’s Digital Disclosure Service (DDS) to disclose income, calculate tax owed, and reduce penalties.
HMRC charges 7.5% annual interest on underpaid tax and penalties ranging from 0–100%, with lower rates (0–30%) for unprompted disclosures.
For PAYE underpayments, verify P800 letters, contact HMRC within 60 days if incorrect, and arrange payment via tax code adjustments or Time to Pay.
Self-employed individuals can amend returns within 12 months or use DDS for older years, ensuring accurate expense claims to minimise tax owed.
Landlords must report rental income via DDS, leveraging the £1,000 Property Allowance and allowable expenses to reduce tax liability.
Negotiate Time to Pay plans with HMRC for debts over £3,000, providing income/expense details to secure affordable monthly payments.
Prevent future underpayments by checking tax codes monthly, tracking all income, setting aside tax money, and claiming reliefs like Marriage Allowance or pension contributions.
FAQs
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The Author:
Adil Akhtar, ACMA, CGMA, CEO and Chief Accountant of Pro Tax Accountant, is an esteemed tax blog writer with over 10 years of expertise in navigating complex tax matters. For more than three years, his insightful blogs have empowered UK taxpayers with clear, actionable advice. Leading Advantax Accountants as well, Adil blends technical prowess with a passion for demystifying finance, cementing his reputation as a trusted authority in tax education.
Email: adilacma@icloud.com
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