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Messed up my tax, how bad will this be?

3 replies

fernsandlilies · 21/01/2024 12:47

In short: I forgot to notify HMRC when I stopped making personal pension contributions in 2018, so my tax code will have been incorrect and I will have underpaid for several years.

I'd like to know whether there is anything else I can do now to try and rectify, and whether it's likely they will impose a penalty?
My job could be affected by a tax penalty, so I'm rather worried.

Longer version; I used to file a tax return because I had minimal investment income (under £100) and claimed relief on personal pension contributions. I was and still am on PAYE and had no other income. In 2018, HMRC told me I didn't need to file more returns. Obviously, it was my responsibility to notify them when something changed, but this meant I just didn't think about it. Later in 2018, I took the opportunity to transfer my private pension funds into my employer's scheme, and stopped making contributions, but I forgot to tell HMRC.

It came to light this year when I received a notice of tax code change, and the personal allowances were all set out.
Since then I have:
a) filed a tax return for 2022-2023 and immediately paid the calculated liability:
b) sent a letter recorded delivery to the PAYE team setting out the full figures;
c) used the online PAYE notification route to notify a change in the information my tax code is based upon - this form only relates to 2022-2023 but I included the information that it dated back to 2018.

Is there anything else I should do now? Do you think there will be a penalty?

OP posts:
Talkinpeace · 21/01/2024 17:40

Pension contributions will only have affected your tax code if you were a higher rate taxpayer AND your pension was not at source.

Getting an accountant to look at your real numbers will be worth it.

Kazzyhoward · 21/01/2024 17:46

Talkinpeace · 21/01/2024 17:40

Pension contributions will only have affected your tax code if you were a higher rate taxpayer AND your pension was not at source.

Getting an accountant to look at your real numbers will be worth it.

I agree. IF there is a liability, fines/penalties will probably be minimal if you (or your accountant) make a full disclosure and lay out the exact detail for each year, showing the tax due, and making immediate payment. There'll be interest but that's unavoidable. What IS avoidable are the fines/penalties which as I say could well be zero with a full disclosure, and even if HMRC try to charge penalties, a good accountant could put a case for mitigation to get them substantially reduced.

fernsandlilies · 21/01/2024 18:05

Thank you both so much, I will get an appointment with an accountant and make the payment as soon as they can calculate it.

OP posts:
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