Additional reporting by

Over one million more people will be forced to pay hundreds of pounds in unpaid tax for 2010/11.

This is in addition to the six million people who paid the wrong tax due to blunders in previous years - full info in the Tax Chaos Q&A news story.

While some of those affected could face handing back around £3,000, the average underpayment to be collected will be between £500 and £600, according to HM Revenue and Customs (HMRC).

However, whereas last year bills for unpaid tax of less than £300 were written off, now tax will be collected from anyone owing £50 or more

In addition, around 3.5 million people could be handed rebates of up to £340 towards the end of next month.

To get an idea of what you might owe or be owed, put your tax code for last year into MSE's unique Tax Code Calculator.

Why is this happening?

The repayments follow an annual analysis of Pay As You Earn (PAYE) records which reveal how many people were incorrectly taxed in 2010-11.

This will either be down to errors by HMRC or to employers failing to supply information relating to changes in working arrangements or company benefits.

Once the repayments have been dealt with, HMRC will issue tax bills to 1.2 million people who owe money. These are expected to be sent out in the Autumn.

The cash, to be docked from next year's pay packets, will be reclaimed over time and, in "hardship cases," individuals will be able to spread the payments over 18 months.

Up to £2,000 per individual will be collected via PAYE with taxpayers asked to make "other arrangements" for additional debts.

The last time there were errors, a possible loophole - the E19 Extra Statutory Concession form - emerged that meant unpaid bills could be written off if HMRC hadn't used the information given to it correctly, but the timescales involved mean it is unlikely to apply this time.

Past errors

The revenue's routine "reconciliation" sparked outrage last year when nearly six million people paid the wrong amount of income tax following computer system errors.

A spokesman for HMRC says the procedures had improved since last year's fiasco and while the average underpayment then was £1,400, it is now less than half this figure.

He says: "The good news is we are in a much better 'place' this year as the new computer system is working fast and efficiently so we will begin by repaying those who have over paid tax through the PAYE system".

Insisting no one was to blame for the discrepancies, he adds: "In some cases, HMRC haven't acted on information we received. Other circumstances will be where the employer hasn't passed information onto us.

"It is inevitable with the PAYE system, it's always been the case, and as people's working patterns change, it's increasingly so."