Do you want the good news or better news on tax bill?

K.C. writes: In 2009, having turned 60, I took early retirement. Since then my income has been from a modest teacher’s pension, a personal pension from Canada Life and some small income from savings. Being 68 now, I have also received the state pension for the past three years. This was all declared to Revenue & Customs in 2009. But I have recently received a tax coding notice which shows I owe an estimated £2,440. The tax office says this is because my Canada Life pension was not taxed. This increase in my tax is causing considerable anxiety. THERE is good news – and then there is better news. I asked staff at the Revenue’s headquarters to look into what had gone wrong and, with commendable frankness, they told me: ‘To be honest, we do not know what has gone awry.’

Their records show that you did declare your Canada Life pension and your tax office did know about this in 2009. Revenue staff believe they had asked for it to be taxed at the basic rate of income tax. But full Revenue records do not go back that far, so officials cannot be certain that the right instructions were sent to Canada Life or, if they were sent, that they were received.

The good news is that a check has shown the outstanding tax to be only £219, not £2,440. The better news is that your tax office is going to write off the £219. The best news is that, even though I did not suggest this, the Revenue has awarded you £35 as a goodwill gesture to make up for your worry over the whole issue of tax arrears.