HMRC Says You've Underpaid Tax? How To Challenge A P800, Simple Assessment Or Tax Code

Your employer or pension provider took tax from every payment, so how can HMRC say you owe more?

Pay As You Earn (PAYE) deducts tax using a code HMRC sets in advance. If the code did not fit your actual income, too little came off, and HMRC wants the rest: the tax itself, not a penalty.

Which letter you have decides your rights and your clock. One clock is urgent: you have 60 days to query a wrong Simple Assessment, and you cannot appeal until you have queried it.

The tax tribunal, formally the First-tier Tribunal (Tax Chamber), can correct tax that is wrong in law. It cannot cancel tax because of HMRC's wrong code or delay, or because paying would be a hardship.

Which Letter Have You Got?

A P800 is a calculation: the Upper Tribunal accepted, in passing, that "a P800 is not a formal statutory assessment" (HMRC v Goldsmith [2019] UKUT 0325 (TCC) at [122]).

If you are in Self Assessment, you usually get neither a P800 nor a Simple Assessment for a year in which you filed, or were told to file, a return (GOV.UK; for Simple Assessments, section 28H Taxes Management Act 1970, "TMA 1970"); an estimate for an unfiled return is a determination.

Check HMRC's Figures First

Where Underpayments Usually Come From

• A wrong code, for example because HMRC had wrong information about your income.
• Changing jobs, with both paying you in the same month; GOV.UK also lists starting a pension at work, and receiving Employment and Support Allowance or Jobseeker's Allowance.
• A second job or private pension taxed on a code that assumed your personal allowance (your tax-free amount) was unused.
• The State Pension, which is taxable and uses up part of your allowance; HMRC collects the tax through another pension or job's code, or by Simple Assessment. Multiply a four-weekly payment by 13, not 12, for the yearly figure.
• An estimated benefit or expense left in your code (see our employment income guide).
• Bank or building society interest (see our savings income guide).
• A large one-off pension withdrawal or bonus on a basic rate code, which takes basic rate tax even on income that falls in a higher band. Once your adjusted net income passes £100,000, your personal allowance also starts to shrink (section 35(2) Income Tax Act 2007), so the code collects far too little.
• Hidden adjustments. GOV.UK says Marriage Allowance and tax owed from an earlier year may sit inside a Simple Assessment's "adjustments" total.
• An underpayment counted twice. HMRC can sweep one it was coding out into a later Simple Assessment (PAYE96325), so check it was not also taken through your code.

What To Gather And How To Raise It

Rebuild the year from your P60 and any P45, payslips, any P11D (your employer's list of your benefits), pension statements, State Pension and benefit letters, bank interest statements, your Personal Tax Account and HMRC's tax checker for previous years. GOV.UK asks you to tell HMRC "which amounts you think are incorrect and what they should be", and to explain "what records you used to check your tax calculation".

Call the Income Tax helpline on 0300 200 3300, or write to the address on your letter or to Pay As You Earn and Self Assessment, HM Revenue and Customs, BX9 1AS. Put anything with a deadline in writing, and confirm calls in writing.

P800s And Tax Codes: When HMRC Collects Through Your Pay Or Pension

How Coding Out Works

"Coding out" means collecting tax through the code HMRC sets under regulation 14 of the Income Tax (Pay As You Earn) Regulations 2003 (the PAYE Regulations).

If you owe under £3,000, pay tax through an employer or pension provider, and earn enough above your personal allowance, HMRC usually collects it through the next tax year's code in equal amounts (GOV.UK). Your coding notice shows this as a cut to your tax-free amount, larger than the tax itself; its note gives the tax you owe (PAYE11040). If the cuts exceed your allowances, you get a K code, which cannot take more than half of any payment (regulations 2 and 23(5)).

If you owe £3,000 or more, have too little PAYE income, or have only the State Pension, HMRC usually sends a Simple Assessment instead. For P800 underpayments, the £3,000 line is HMRC practice; the only legal cap is the K code limit.

Asking HMRC To Spread, Limit Or Stop The Coding

The Act behind PAYE allows a past year's underpayment to be collected through your code "if and to the extent that the payee does not object" (section 684(2) Income Tax (Earnings and Pensions) Act 2003, "ITEPA 2003", item 2), so you can object to all or part of it.

HMRC's guidance (not law) says you "cannot request to pay an underpayment by Simple Assessment" (PAYE12070). But if the underpayment exceeds your normal yearly tax bill, you can ask for no more than that to be coded, and staff "must change the coding" (PAYE13075); for hardship, it can be spread over up to 3 years.

Objecting does not cancel the tax. You can pay it directly before 6 April through GOV.UK's P800 payment service, using the reference from your most recent P800.

Objecting To A Code, Then Appealing

Under regulation 18, you object, stating your grounds, and HMRC may agree an amended code. If not, you may appeal by notice to HMRC, and on an appeal notified to the tribunal, "the tribunal must determine the code in accordance with these Regulations".

Regulation 18 sets no time limit, and HMRC's manual says an objection "can be done at any time during the year" (PAYE13075). Your employer must keep using the code meanwhile (regulation 21(2)), but where you do not understand HMRC's figures, its guidance tells staff to "leave out any amount in dispute" if deductions would start before they can explain them and "The appeal seems fair" (PAYE13075), so ask for that.

A code appeal can test a P800 figure: HMRC's guidance says "An individual may appeal against the amount of an underpayment in the coding" (PAYE13075). But it settles only the code. HMRC can still assess different figures after the year ends, and its guidance calls it "best practice to take technical points on an appeal against a Revenue assessment, rather than a coding adjustment". So if HMRC has issued a Simple Assessment for the year, challenge that instead.

Simple Assessments: Query First, Then Appeal

A Simple Assessment (form PA302) is a formal assessment of your tax for the year (section 28H TMA 1970), used when your code cannot collect the tax. In GOV.UK's example, a pensioner owes £986, but the code on their £1,500 private pension can take at most £750 (half the pension), so a Simple Assessment collects the other £236.

Query It In Time

To query it, you tell HMRC of "a belief that the assessment is or may be incorrect" and "the reasons for that belief" (section 31AA(2) TMA 1970), within 60 days after the date the PA302 was issued, or longer if HMRC allows (section 31AA(3)). A good query includes:

• your name, National Insurance number, the tax year, and the PA302's date and reference;
• that you are querying the Simple Assessment under section 31AA TMA 1970;
• each figure you think is wrong, what it should be, and the records that show it;
• a request that HMRC postpone the disputed amount (section 31AA(6));
• a request for an explanation of any figure you cannot follow (section 31AA(12)).

A complaint or an ESC A19 claim (see below) does not stop this clock.

HMRC's Final Response

In Russell v HMRC [2026] UKFTT 367 (TC), HMRC treated Mr Russell's letter of 24 October 2024 as "a statutory query of the Assessment", but replied only on 25 June 2025, eight months later ([12]-[13]). The tribunal noted that the law sets HMRC no deadline for its final response ([24(3)]).

The final response confirms, amends or withdraws the assessment, in writing (section 31AA(9)-(10)). HMRC's guidance says a "query and suspend" flag closes automatically after 6 months, issuing a new PA302 even if nothing has changed (PAYE96345). That can restart collection, so chase a slow reply in writing, and complain if it drags on.

Treat any letter or new PA302 HMRC sends after your query as its final response, even if the figures are unchanged, and count 30 days from its date. An amended assessment given as the final response cannot be queried again (section 31AA(11)).

Appealing The Final Response

A query is not an appeal: Mr Russell called his letter "my initial appeal" ([28(3)]), but still had to appeal after HMRC replied.

To appeal, write to the officer who gave the notice of assessment (use the contact details on your PA302 or HMRC's reply), with your grounds, within 30 days of the final response (section 31A TMA 1970). You can then ask for an HMRC review or notify the tribunal (section 49A TMA 1970); see writing grounds of appeal. HMRC may instead reply with its view and offer a review. You then have 30 days from the date of that letter to accept the review or notify the tribunal; if you do neither, HMRC's view is treated as an agreement that settles your appeal (section 49C(4) TMA 1970), and you can go to the tribunal after that only with its permission. After a review, you have 30 days from the date of the review conclusion letter to notify the tribunal. There is no fee, and outside the Complex category you normally risk paying HMRC's costs only if you act unreasonably (tracks and costs).

What The Tribunal Can And Cannot Decide

Almost all Mr Russell's 2023-24 income was taxed at 20% under a basic rate code HMRC had based on his much lower income the year before ([10], [30]). Income of £138,997 cost him his personal allowance: tax of £48,751.65, less £27,589.20 deducted, left £21,162.45 ([11]).

He did not dispute the figures ([29]), but argued that HMRC set the code, that he could not pay, that HMRC delayed, and that it was "remarkably unfair" ([28]). The tribunal struck the appeal out (ended it early): its jurisdiction "is limited to considering whether as a matter of law, the amount assessed by HMRC in the assessment is the correct amount" ([25]), so none of his reasons could reduce or set aside the assessment ([31]).

That limit is binding: in HMRC v Hok Ltd [2012] UKUT 363 (TCC), the Upper Tribunal held that the First-tier Tribunal has no general power to correct unfairness, and Russell relied on it ([25]).

Grounds that can work include wrong or double-counted income, tax deducted that HMRC missed (a P60 or P45 it lacks), missing allowances or reliefs, or an assessment made too late.

If You Missed A Deadline

The law lets HMRC accept a query after the 60 days are up ("such longer period as HMRC may allow", section 31AA(3)(b)). You cannot appeal a Simple Assessment until you have queried it and had HMRC's final response (section 31(3A)), so ask HMRC in writing to accept a late query and explain why you are late.

After the final response, a late appeal needs HMRC's agreement or the tribunal's permission (section 49 TMA 1970; see late appeals and the Martland test).

Once both windows have passed, you can still claim overpayment relief within 4 years of the end of the tax year, but HMRC can refuse it if, while you could still have queried or appealed, you knew, or ought reasonably to have known, that the tax was wrong and that you could challenge it (Schedule 1AB TMA 1970).

Paying While You Dispute It

A Simple Assessment is payable by 31 January after the tax year or, if the PA302 was given after the 31 October following the tax year, 3 months after the date it was given (section 59BA TMA 1970). Use the due date printed on your PA302.

A query does not stop collection. HMRC "may postpone" the assessment while it considers your query (section 31AA(6)), must tell you in writing if it does (section 31AA(7)), and only then are you under no obligation to pay the postponed part (section 31AA(8)). So ask expressly, and keep HMRC's reply.

HMRC's guidance says postponement ends with the final response, so to keep the tax postponed on appeal, you "must apply for that postponement under s55(3)" (ARTG2515). Apply in your appeal letter, even if the PA302 is months old, stating the disputed amount and why you believe you are overcharged. If HMRC refuses, you can ask the tribunal to decide, within 30 days of HMRC's decision (section 55(3)(b) TMA 1970). Our postponement guide has a template letter.

Paying does not stop you querying or appealing. Pay the part you agree by the due date, or set up a payment plan before it. GOV.UK says "There's no time limit on how long a payment plan can last", and HMRC "will not count the amount in your pension pot as savings". If you neither pay nor agree a plan, HMRC can pass the debt to a debt collection agency.

When Your Employer Or Pension Provider Got It Wrong

If They Used The Code HMRC Sent

Your employer or pension provider must deduct tax using the code HMRC sends, even while you object to it (regulation 21). Read together, the regulations mean that if it did so, any shortfall is your own unpaid tax, not an employer error, as in Russell.

If They Did Not, The Shortfall Usually Stays With Them

If your employer did not operate the code HMRC sent, HMRC's guidance says that, unless there is a direction, "the responsibility for the tax lies with the employer" (EIM71430), and under-deductions "should always be requested from the employer in the first instance" (PAYE92066). You get credit for tax that should have been deducted (regulations 185(5) and 188(3)(a)).

If the shortfall has reached you as a P800 or Simple Assessment, say so in your reply or query (within the 60 days for a Simple Assessment), and ask whether a direction has been made.

Direction Notices And How To Appeal Them

HMRC normally moves the liability to you by a direction under regulation 72(5), which needs one of two conditions:

• Condition A: the employer satisfies HMRC both that it took reasonable care and that the failure was an error made in good faith (regulation 72(3)).
• Condition B: HMRC is of the opinion that you received the pay knowing that the employer wilfully failed to deduct the tax (regulation 72(4)).

You can appeal by notice to HMRC within 30 days of the notice being issued, giving your grounds:

• Against Condition A: that the employer did not act in good faith, did not take reasonable care, or the amount is wrong (regulation 72B).
• Against Condition B: that you did not know of a wilful failure, or the amount is wrong (regulation 72C).

The tribunal can set the direction aside or change the amount.

In Blanche v HMRC [2011] UKFTT 164 (TC), an agency driver lost: the tribunal had "no doubt" that the agency "acted in good faith" ([16]). Checking each payslip's code against your coding notice catches errors early.

In Witton v HMRC [2026] UKFTT 267 (TC), a company director won: HMRC must prove Condition B ([178]-[179]), and "knowing" means knowing, not "ought to have known" ([186]), so the regulation 72 decision was set aside ([190]).

Where The Tribunal Cannot Help

Apart from express appeals, such as against directions, "the availability of the PAYE credit does not fall within the First-tier Tribunal's jurisdiction" (Hoey v HMRC [2022] EWCA Civ 656 at [130]-[131]). In Hoey, a disguised remuneration case, HMRC used a different power (section 684(7A)(b) ITEPA 2003) that left him paying without PAYE credit ([205(i)]), and "The only avenue for challenging its exercise is on judicial review in the Administrative Court" ([205(iii)]), a High Court claim that HMRC acted unlawfully.

When HMRC Was Slow To Use Information It Had: ESC A19

An extra-statutory concession is HMRC's published practice of not collecting tax it could legally collect. Under ESC A19, arrears "may be given up if they result from the failure of HMRC to make proper and timely use of information supplied by" you, your employer or pension provider (if the information affects your code), or the Department for Work and Pensions about your State Pension or a disability or widow's pension (PAYE95005; PAYE95045).

Tax is normally given up only if you "could reasonably have believed" your affairs were in order, and HMRC told you of the arrears more than 12 months after the end of the tax year in which it received the information. HMRC's guidance adds that last year's arrears found this year involve no failure "regardless of when the information was received" (PAYE95045). So a routine P800 will usually not qualify; the concession matters for older years.

Claim before paying: GOV.UK says "You should do this before you pay any of the tax you owe", though HMRC "may be able to refund" a payment already made.

There is no appeal. In Lee v HMRC [2023] UKFTT 651 (TC), a child benefit charge case, the tribunal said it "has no jurisdiction to resolve disputes over extra-statutory concessions" ([71]), pointing instead to a complaint or to judicial review, which it called "expensive" ([72]).

You can ask HMRC to review the refusal (PAYE95090), then complain, then go to the independent Adjudicator (normally within 6 months of HMRC's second-tier complaint reply) and, through your MP, the Parliamentary and Health Service Ombudsman. Judicial review must be started promptly, and within 3 months at most, so do not assume it can wait for the complaints process.

How Far Back Can HMRC Go?

HMRC normally has 4 years after the end of the tax year to make an assessment (section 34(1) TMA 1970). The limit is 6 years where you (or someone acting for you) brought about the loss of tax carelessly, 20 years where it was deliberate, and 20 years where it came from failing to tell HMRC you were liable to tax when required (section 36).

You can argue that an assessment came too late only on an appeal (section 34(2); Russell at [24(2)]). So if "too late" is your only point, you still need to query, then appeal (see our discovery assessments guide).

What To Do Now

1. Diarise the clock from the date on your letter: 60 days to query a Simple Assessment, 30 days to appeal HMRC's final response, 30 days to appeal a direction notice. A code objection has no deadline, but is best made before the deductions start.
2. Rebuild the year from your own records, listing each figure you dispute and what it should be.
3. Write to HMRC at the address on your letter and keep proof. For a P800, say which figures are wrong, and object to the coding if HMRC will not change them. For a Simple Assessment, query it under section 31AA with your reasons, and ask HMRC to postpone the disputed amount.
4. Pay what you agree you owe by the due date, or set up a payment plan before it.
5. If HMRC's final response does not fix it, appeal in writing with your grounds, and ask in the same letter to postpone the disputed tax. If HMRC then offers a review, accept it or notify the tribunal within 30 days of the date of its letter.
6. If your employer's mistake is involved, ask HMRC whether a direction has been made, and for a copy.
7. If HMRC failed to use information it already had, claim ESC A19 before paying; if HMRC refuses, ask for a review, then complain.
8. Get free help early if the sum is large or you are struggling: see our representation guide.

Key Legislation And Resources

Legislation

• Section 28H TMA 1970—Simple Assessments, and who cannot receive one
• Section 31 TMA 1970—the right of appeal, including the rule that a Simple Assessment must be queried first
• Section 31A TMA 1970—notice of appeal, its deadline and where to send it
• Section 31AA TMA 1970—querying a Simple Assessment, postponement during a query, and HMRC's final response
• Section 34 TMA 1970 and section 36 TMA 1970—how far back HMRC can assess
• Section 49 TMA 1970—late appeals
• Section 55 TMA 1970—postponing payment pending an appeal
• Section 59BA TMA 1970—when Simple Assessment tax is due
• Section 684 ITEPA 2003—what the PAYE Regulations may do, including your right to object to coding out
• Section 35 ITA 2007—the personal allowance and its reduction for higher incomes
• Income Tax (Pay As You Earn) Regulations 2003: regulation 2 and regulation 23—the K code cap; regulation 14—how HMRC sets your code; regulation 18—objecting to and appealing a code; regulation 21—your employer must use the code
• Regulation 72—directions moving an employer's under-deduction to you; regulation 72B and regulation 72C—appeals against directions; regulation 185 and regulation 188—credit for tax your employer should have deducted

Key Cases

• Russell v HMRC [2026] UKFTT 367 (TC)—a pension drawdown taxed on a basic rate code; a letter treated as a query; appeal struck out because the tribunal decides only whether the tax is right in law
• HMRC v Hok Ltd [2012] UKUT 363 (TCC)—no tribunal jurisdiction over fairness; our analysis
• HMRC v Goldsmith [2019] UKUT 0325 (TCC)—a P800 is not a formal statutory assessment; our analysis
• Hoey v HMRC [2022] EWCA Civ 656—the PAYE credit is outside the First-tier Tribunal's jurisdiction; express appeal rights for directions
• Blanche v HMRC [2011] UKFTT 164 (TC)—Condition A direction upheld; an employer's good-faith payroll error and unchecked payslips
• Witton v HMRC [2026] UKFTT 267 (TC)—Condition B not proved; actual knowledge required; credit where no direction applies
• Lee v HMRC [2023] UKFTT 651 (TC)—no tribunal jurisdiction over ESC A19; judicial review or a complaint instead

HMRC Guidance

• PAYE11040—how an underpayment appears on a coding notice
• PAYE12070—coding out underpayments: limits and safeguards
• PAYE13075—objections and appeals against codes; spreading and hardship
• PAYE92066—credit for under-deductions by your employer
• PAYE95005—the text of ESC A19
• PAYE95045—what counts as proper and timely use of information
• PAYE95090—ESC A19 refusals: review, complaint and the Adjudicator
• PAYE96325—earlier underpayments carried into a Simple Assessment
• PAYE96345—how HMRC handles Simple Assessment queries and appeals
• EIM71420—code appeals to the First-tier Tribunal
• EIM71430—without a direction, the employer remains responsible
• ARTG2515—postponement after a Simple Assessment query

GOV.UK Guidance

• Tax overpayments and underpayments—P800s, and how HMRC collects what you owe
• Pay your P800 tax calculation—paying directly instead of through your code
• Understand your Simple Assessment—checking the figures, the worked example and querying
• Simple Assessment—paying and contacting HMRC
• Tax codes—what your code means, including K codes
• If you cannot pay your tax bill on time—payment plans
• If HMRC did not act on information—claiming under ESC A19
• Complain to HMRC and complain to the Adjudicator's Office—the complaints route
• Income Tax enquiries—HMRC's helpline and postal address

On This Site

• Appealing HMRC On Your Job Expenses And Benefits—benefits and expenses that feed a P800
• Savings And Investment Income Appeals—checking HMRC's interest figures
• Can You Appeal An HMRC Determination Or Dispute Your Tax Return?—determinations and overpayment relief
• Goldsmith v HMRC—why a P800 is not an assessment
• Hok v HMRC—why "it's not fair" is not a ground of appeal
• Postponing Payment During An Appeal—section 55 in detail, with a template letter
• HMRC's Internal Review—the review after you appeal
• How To Appeal To The Tax Tribunal—notifying the tribunal
• Missed The Deadline? Late Appeals—appealing late
• Martland v HMRC—how the tribunal decides whether to allow a late appeal
• Writing Grounds Of Appeal—what to put in your appeal letter
• Tribunal Tracks And Costs—case categories and when costs can be awarded
• What Is The Tax Tribunal?—how the First-tier Tribunal (Tax Chamber) works
• High Income Child Benefit Charge—another charge that can be collected through your tax code
• Discovery Assessments—time limits for assessments
• The Loan Charge And Disguised Remuneration—analyses Hoey in the disguised remuneration context
• Do You Need A Representative At The Tax Tribunal?—free and paid help

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.