About 1m people have been urged to check their tax returns because of widespread errors by Revenue & Customs.
The National Audit Office said last week that in the 2006-7 tax year, the taxman miscalculated income tax in 5 per cent of cases, or 1m returns.
Taxpayers underpaid by £125m, but overpaid by £175m. The Revenue pays interest of only 3 per cent on overpaid tax against the 7.5 per cent it charges if you underpay. The average underpayment was £250, and the typical overpayment was about £290.
Mike Warburton of accountant Grant Thornton said you should first check your tax code to see if you have the right allowances. The Revenue sends out coding notices once a year. You can check them at hmrc.gov.uk/pensioners/ understandingyourp2.htm (not just for pensioners).
"Never assume what the Revenue has sent you is correct," he said. "If you're not sure, ring them up."
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The Revenue will also send you a statement of account once a year after the January 31 self-assessment deadline. If you have overpaid, don't expect the taxman to pay you back automatically. If you fill in your own tax returns, it is up to you to ask for a refund.
If you have underpaid you have two choices. You can either send the taxman a cheque for how much you owe or, if you owe less than £2,000, ask for the money to be coded into the following year's tax payments. On top of the 7.5 per cent interest on underpayments, you could also face a 5 per cent surcharge.
This latest debacle will undermine calls made last week by the taxman to take money directly from people's accounts without having to go through the courts.