What has happened?
About 6 million people have either paid too much or too little tax, after it emerged that workers' tax bills have been miscalculated over the past two years.
The errors have been made in the Pay As You Earn (PAYE) system, used to collect tax.
While around 4.3 million people are thought to have made overpayments and will therefore be in line for a refund averaging £420, about 1.4 million have underpaid tax. They will need to pay out an extra £1,428 on average.
As a result, many people will now be worried that they will face a demand for cash they may not have saved.
How did this come to light?
HMRC's new computer network identified the miscalculations, revealing that a "significant proportion" of incorrect tax codes had been sent out.
When will I find out if I am affected?
HMRC will be sending out letters between now and the end of the year. It has already begun sending out the first 45,000 letters to people who are affected, around 15,000 of whom have underpaid tax, while 30,000 are due a rebate.
For many, that will be a mean a Christmas bonus - albeit one they should have enjoyed over the past couple years - as the tax office is to issue cheques as soon as possible.
Of course, for the 1.4million who underpaid through no fault of their own, the news will be much less welcome.
However, there's nothing you can do to find out if you're affected until you receive a letter. Don't worry too much, as the majority of people will be unaffected.
Will I have to pay it immediately?
No - although it will be frustrating if you have been affected by this mess, you will not be asked to stump up the cash straight away.
Instead, the money will be gradually reclaimed through your future PAYE contributions. If you are affected, you'll receive a letter outlining exactly how much extra you'll be paying and over what timescale.
Repayments will begin in the new tax year - from April 6, 2011. If you have underpaid, you may well want to start budgeting for the cut in your income as soon as possible to avoid this causing you real problems.
Isn't there some sort of loophole?
Some taxpayers have been hoping that a loophole will allow them to avoid paying back any underpayments, but the tax office has reacted quickly to dispel that hope.
Under the A19 Extra-Statutory Concession, those who could have reasonably believed their tax payments were all in order can apply to HMRC to have any outstanding amount written off.
However, while at a first glance that sounds like most of the affected people can legitimately claim - after all, this has come as a surprise to many - the tax office says that most people will not qualify, as the conditions are tough to meet.
Tax officials have agreed that some taxpayers owing larger sums will be given three years to repay the outstanding amount.
Won't any debt be written off?
There is some good news. HMRC has confirmed that people owing less than £300 in underpaid taxes will not be pursued for the outstanding amount. That's quite an increase on the previous cut-off figure of £50.
Be careful
It's worth finishing with a warning about phishing, where criminals pretend to be from your bank or another legitimate organisation to try and steal your personal information.
One of the most common phishing scams are phone calls or emails purporting to be from the tax office, when actually they are from crooks and fraudsters.
HMRC will be contacting people by letter. If you receive an email, be suspicious, don't reply and don't click on any links in case they are fraudulent.
Instead, go to HMRC's website or call the helpline on 0845 366 7816. You can forward phishing attempts to: phishing@hmrc.gsi.gov.uk.
Similarly, if you receive a phone call, don't reveal any personal information until you are certain it is genuine. You may prefer to call back once you have verified the number.
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