April 1st is usually a day for pranks, but when it comes to HMRC mistakes, there’s nothing funny about them. Every year, businesses and individuals are caught out by errors – both their own and HMRC’s. This can lead to unnecessary penalties, stress, and financial loss.
Common HMRC errors that could cost you
1. Incorrect tax calculations
HMRC’s systems are not infallible. Whether it’s PAYE miscalculations, incorrect National Insurance figures, or self-assessment errors, many taxpayers find themselves facing unexpected bills or refunds that don’t add up.
If something looks wrong, don’t assume HMRC is always right. We’re here to help you challenge it.
2. Delayed or lost correspondence
HMRC’s letter-based communication can be painfully slow, and sometimes, crucial documents simply don’t arrive. If you’re relying on a tax code change or an appeal response, delays can leave you in limbo.
Keep records of every interaction and follow up if you don’t hear back within a reasonable timeframe.
This year we received a reply from HMRC 49 weeks after we sent a letter to them.
3. Wrong penalties and interest charges – even when paid in full
One of the most frustrating errors taxpayers encounter is being hit with a penalty despite having paid their tax in full and on time.
We are working closely with Directors to help where VAT has been paid in full and on time, but they still got a penalty. HMRC’s automated system can sometimes fail to match payments correctly, leading to unnecessary fines.
If this happens, challenge the penalty immediately and provide proof of payment.
4. Misdirected payments
Payments made to HMRC don’t always land where they should.
If a payment is allocated to the wrong tax year or tax type, you might still get chased for an overdue bill – even though you’ve already paid.
Always check your HMRC online account to ensure payments have been applied correctly.
5. VAT registration and deregistration errors
Businesses applying for VAT registration have faced delays, incorrect processing, and even wrongful rejections.
Similarly, businesses trying to deregister have found themselves stuck in the system longer than necessary, leading to additional VAT liabilities.
6. Refunded. Then asked to pay it back (oh it happens)
A particularly frustrating mistake is when HMRC issues a refund without properly deducting the payment due for that month.
Businesses and individuals may suddenly find themselves being asked to pay back money that was repaid by HMRC.
You can’t assume you can just spend it – check first!
If you receive a refund, always double-check whether HMRC has correctly accounted for any outstanding or upcoming liabilities before spending it – such as a payment on account for Self Assessment.
7. Weird assumptions
HMRC do not know all the facts.
They have a super system that can tell lots of information – like when you sell a property.
We helped navigate when HMRC made the assumption and asked for details on the sale of a house – where they had worked out a ma-housive (see what I did there?) tax charge based on the fact that our client had bought this house aged 9.
Actually, the facts were that she was selling her parents’ house as the executor – and no tax was due.
How to protect yourself from HMRC errors
- Check everything: Don’t assume HMRC figures are correct. Review your tax calculations, PAYE codes, and statements regularly.
- Keep records: Save copies of tax returns, payment confirmations, and correspondence with HMRC.
- Follow up: If HMRC is slow to respond, don’t wait indefinitely. Chase them for updates.
- Challenge mistakes: If you receive an incorrect tax bill, penalty, or refund, dispute it. HMRC does make mistakes, and many challenges are successful.
- Use a professional: An accountant or payroll expert can spot errors quickly and handle disputes on your behalf – and we’re happy to help.
Final thought
HMRC errors aren’t just an inconvenience – they can be costly.
This April Fools Day, don’t let your business become the punchline of a tax mistake.
Stay vigilant, check your records, and challenge anything that doesn’t look right.
Because when it comes to HMRC errors, this is no joke.
