Trying to understand calculation of underpaid tax from previous tax years as PAYE

Hello, Have been PAYE with the same employer since 2018 up until redundancy in march 23. Came to submit my self assessment yesterday for 22/23 and the amount owing is double what was expected at ~£4K. Looking into it there is a charge of ~£2300 for: "plus Underpaid tax for earlier years in your tax code for 2022-23" This amount correlates exactly to the balancing payment for year 20/21 which I opted to repay via tax coding, and was informed (HMRC statement dated Dec 21) would be included in my PAYE coding for 22/23, leaving me with nil to pay. I was then in full time employment with the same employer up until march 23. My PAYE code was then dropped from 905TM1 to 557L for 22/23, in theory reclaiming some of the outstanding amount from 20/21. I then can't understand how the full amount from 20/21 remains outstanding - I called the service centre, to have a very rushed explanation put across, that didn't make sense, and then the phone was put down on me. Please assist. Thanks.

Hi

If you opted to pay your 20/21 balancing amount in your 22/23 code, this amount needs to be included in your 22/23 tax calculation.
This ensures the deduction that was made to your 22/23 tax free allowances to collect the balancing payment through your wage is also reflected in your 22/23 calcualtion.
If the 20/21 balancing payment deduction in your 22/23 code is NOT included in your 22/23 calculation, you will be incorrectly refunded the 20/21 balancing amount you repaid through your wage, as the corresponding deduction in you 22/23 tax-free allowances will not be represented.

Thank you