If you think the tax bill is wrong

Introduction

Quite often, Statements of Account or demands for tax show the wrong amount due.

This may be, for example, because:

• the Revenue has not taken account of a tax refund that is due to you for another tax year,
• a payment that you have made has not yet been credited to you, or
• the tax office has made a mistake.

In simple cases it may not be difficult to get the Revenue to correct its figures. Contact your tax office by telephone, and try to get the matter sorted out. Make a note of the name of the person you speak to, the date of the conversation, and what was discussed and agreed.

Your 'tax office' is the office to which you are required to send your tax returns. Details, including the telephone number, are given on the front page of each tax return, and at the top of each statement of account that you receive.

If you are already being pursued by a collector, you should tell him that you believe that there has been a mistake and that you have contacted your tax office to sort things out. The collector may agree not to take further action until the tax office has had a chance to check the matter.

What if the tax office disagrees with you?

In some cases your tax office will not agree that there has been a mistake.

If you think that it has not looked at things properly, you may make a complaint and ask for the matter to be reviewed by a more senior officer.

Alternatively, there may be a right of appeal. This will depend upon the nature of the error that you believe has been made. Your tax office will usually offer guidance as to whether you have any right of appeal, and how to pursue this, although you may prefer to seek independent advice.

Demands based on last year's tax

Under the rules of self assessment, you may be required to make interim payments for a tax year, known as payments on account , based on your tax for the previous year.

Payments on account fall due on 31 January in the tax year and on 31 July just after the end of the tax year.

If you believe that the tax bill on your income for any year will be lower than the previous year's bill - or that there will be nothing at all to pay - then you may claim to reduce your payments on account.

This can be done on a Revenue form SA303 or by letter.

Note

A claim to reduce payments on account should not be used just because you have a 'cash flow' problem.

Demands based on estimates

In certain circumstances you may receive a demand based upon an estimate of income that the Revenue considers you to have received. This can occur in three ways discussed below.

Determinations

If you have not filed your tax return by the due date, the Revenue has the power to issue a determination of tax payable. This states that you must pay a specified amount of tax for the year concerned.

There is no right of appeal against a determination, but you can have it set aside simply by filing your tax return for the year. Once your return is received, the Revenue should amend its demand to reflect the tax due, if any, based upon the income and gains reported on your return. (You may file the tax return without calculating the tax due; the Revenue will do this for you.)

Amendments following an enquiry

If your tax return has been selected for an enquiry, and the Revenue concludes that you have understated the income you received, it may ask you to amend your self assessment (i.e. amend the figures shown on your tax return). If you do not do so within 30 days, the Revenue may amend the assessment, and may well make estimates. If you are unhappy with the Revenue's amendment, you may appeal to the independent Tax Commissioners.

Estimated assessments for tax years up to 1995/96 and the relief known as equitable liability

Before self assessment was introduced in 1996/97, tax liabilities were based upon assessments made by the Revenue. If it did not have your return or accounts, then it would make an assessment based on an estimate of your income.

There was always a right of appeal against such estimated assessments, but the figure shown on an assessment could become final if you did not appeal on time, or failed to attend a hearing of the Tax Commissioners.

If you still owe tax based on such an assessment, the Collector has the legal right to pursue you for the full amount charged, even if it appears unreasonably high.

However, the Revenue recognises that this can be unfair, and it operates a practice known as equitable liability , under which it may agree to collect a lower sum.

Other disputed amounts

Even where the collector is demanding an amount based upon figures given in a tax return, you may believe that this is wrong because:

• the tax office has work ed out your tax incorrectly, or
• you made a mistake on your tax return.

If the Revenue has worked out your tax incorrectly

There is no right of appeal, but the Revenue does have a duty to get the tax right. So if it has made a mistake, you should follow the guidance under the 'Introduction' and 'What if the tax office disagrees with you?' above.

If you made a mistake on your tax return

There are two possible remedies.

You may amend your return. This is done by writing to your tax office, explaining the error, giving the correct information, and asking for your return to be amended. The tax office will then normally make the change that you request. (It may ask you to complete certain pages of the tax return again.)

An amendment may normally be made at any time up to 12 months after the filing date, even during an enquiry.

After the 12 month deadline has passed, you cannot amend your return. However, in this situation you may still write to ask for relief 'for error or mistake' under section 33 of the Taxes Management Act 1970. If so, the tax office should amend your tax bill on a just and reasonable basis.