Final Reminder

A question about : Final Reminder

I've just received a letter through the post headed Self Assessment: Final Reminder in big red letters, which was unexpected and quite disconcerting.

I filled in my online tax return on 28 January, so was well within the deadline. The online provisional calculation page said I owed about Ј3000 and that the figures would need to be looked at by an HMRC official who would make an official final calculation.

The Ј3000 I allegedly owe is due to having underpaid income tax when I was made redundant in March 2014, even though my employer assured me that the correct amount of tax had already been deducted from my redundancy pay. Since my ex employer is a large multinational with about 50000 employees and uses a well-known payroll software system, I had no reason to suspect that I had underpaid, and expected my tax return to be just a formality.

After filling in the tax return, I waited to receive the final calculation. What I got instead was this Final Reminder - this is their first correspondence, how can it be a reminder?

The letter says You missed the 31 January payment deadline. Yes, that's because I filed my online tax return on time and the online system told me to wait for an official calculation.

It says if I don't pay immediately, they will set their debt collectors on me, and the amount will continue to accrue interest.

How fair is that?

They don't specify how much interest, or how long I have (other than you need to pay now) before this interest will start accruing.

Does anyone have any advice?

(By the way, their letter is dated 6 February even though I only received it today, the 16th.)

Best answers:

• Ring them would be the first course of action, though I would have rung them straight away if I had got the message you got after submitting your return.
  The tax, as currently calculated, is overdue. You will probably need to pay it ASAP. Do you have any reason to think it's wrong?
  Why did you wait until a few days before the deadline to file a return? We're you expecting to owe tax? If you'd filed it months ago you would have been able to sort it out well before the payment deadline.
  Get on the phone to HMRC ASAP. I believe interest starts accruing from the end of this month.
• Interest is already running. I'd be more worried about the 5% surcharge that will be applied if the balance is not paid by 2 March (I think it is - used to be 28 February but is now 30 days after payment deadline, I believe, probably to avoid confusion in leap years).
  Was the redundancy payment made before or after the P45 was issued, as that could make all the difference? If after then they should have applied a 0T code, although that would usually lead to an overpayment, if anything.
  Is your taxable income for 2013/14 over Ј100K? A lot of payrolls don't seem to be able to cope with the personal allowance phase-out (and certainly wouldn't if you had significant other income taking you over the Ј100K threshold).
  You'd probably need to post more details for people here to be able to help you further.
• Thanks for the replies.
  In answer to questions raised:
  I left it to the last minute because I really didn't think I owed any tax at all. The redundancy was paid on my last day at work, and my P45 included the full amount of the redundancy payment. I think you are right that the discrepancy was due to the payroll system having failed to calculate the personal allowance phase-out after Ј100K. I didn't expect such a highly regarded payroll system to be that bad. I don't have any reason to doubt that I owe the tax, but I feel annoyed at my previous employer for having misled me about the tax. As a result, I've already used up most of the money to pay off existing debts and to live off it until I found another job. I will have to wait until I get paid at the end of this month before I can pay the tax due. However, if interest has already started accruing, does this mean that after I pay this tax bill I will get another bill for the interest?
• Thanks dori2o. I'm not going to get a late payment fee because I can pay before 2 March. What I was asking was, if I pay this tax bill at the end of this month (the 27th) will my account then be clear, or will I get a further bill for the interest incurred from the time payment was due (31 January) until I paid it (27 February)?