I also received a tax return last year, demanding payment of just shy of £1000. I think it was triggered by a small FRI paid in 2001, which was taxed at 40%. I could not understand why I had to pay such a large sum ( not offered, or aware of, the payment through tax code until too late) and went through 4 different tax people at the tax office to get them to explain to me why I had such a large bill. Not one answer and in one case did not even bother to call me back with the answer after promising to do so. The end result was a demand for the payment the following day!
Could not pay immediately so informed them accordingly and paid a month later, out of long term savings. Then received another bill for interest for the month. T****.
Weeks later, received another tax bill for 2002 for a similar amount. Same story again as to lack of explanation from the tax office, but this time pound of flesh taken through tax code.
Went to see an accountant who very quickly pointed out that the tax people were unaware of my yearly increased earnings, and were taxing me at too low a rate; hence the tax bills. ( and he didn't charge me!!)
He said that there are 2 offices, one does pay and one does coding or suchlike, and the 2 are operating at about 2 years apart. So to anyone who has had one of those grat issues of sterling from the MOD; stand by for a large bill in 2 years time.
Todays top tip is; when you get a payrise fill in a tax return.