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  • Balancing payment huge compared to previous year's tax

    I'm struggling to understand why my wife has been asked to make what to us is a large balancing payment of £500 when her total liability for the previous year appears to be £3.05. It's a bit more complicated than that, as she's started a number of (very) small online businesses and on completing a return for 2021/22 was asked to complete one for 2020/21. She did so and submitted it on paper (as there was no option to file it online). Next thing we know she's got a late filing penalty. By this time an option to file online had appeared, so shes used it and successfully appealed the penalty. However, her account now shows an overdue adjusted balancing payment for 2020/21 for £493.95 plus interest. Given the tax liability for 2020/21 was £3.05 and for 2021/22 was £0, what could have given rise to a balancing payment of that size? Should we just pay the sum "owed" and then seek to clarify?