I have completed a voluntary disclosure for one of my client's showing rental income. However, I received a call from the voluntary disclosure office saying that my calculation of tax was incorrect. The reason for this is because they do not take into account the underpayment/overpayment of PAYE taxes paid during the tax year. They simply look at the total rental profits and total PAYE gross income and apply the relevant rate of tax.
My client is a higher rate tax payer. They had overpaid tax in a few of the years (no P800T or PAYE repayments were made to the client). Therefore, the actual amount of tax due as per our calculations is lower than what they are saying the figure should be. They have informed me that any overpayment of tax should be requested from the PAYE tax office rather than making the adjustment in the disclosure. Therefore, the client would have to pay more tax than necessary and it may not be guaranteed that we will be able to recover this money from the office.
Has anyone else had this issue with the voluntary disclosure office? Does HMRC have any rules posted online for this?
Thank you in advance for your help