Nearly six million people have paid the wrong amount of tax with around £2bn underpaid via the Pay As You Earn(PAYE) system in the past two years.
Around 1.4 million people owe an average of £1,500 each as a result of the error but £1.8bn has also been overpaid and 4.3 million people are due a rebate, the BBC reports.
Millions of letters will be sent to taxpayers across the UK informing them of errors in their contributions.
The first 45,000 are expected to arrive on Tuesday, with 30,000 informing recipients they are due a rebate of on average £418.
The remaining 15,000 letters will tell taxpayers they have underpaid and will have their tax code altered next year to recoup the money.
It is thought that some individuals may face both underpayments and overpayments, which could cancel each another out.
Treasury minister David Gauke said in the current financial climate, the government could not just write off the money owed, the BBC reports.
He said the PAYE system - created in the 1940s - was struggling to cope with modern working patterns.
A new computer system introduced by HMRC in 2009 has allowed more discrepancies to be identified.
Discrepancies arise when the amounts deducted in tax and National Insurance by employers using the PAYE system do not match the information held on HMRC records.
This most often occurs when individuals change jobs, have more than one job at the same time, or because employers are using the wrong tax code.
In some cases officials say they will consider writing off demands for additional money if taxpayers can demonstrate they provided all the information necessary to calculate their tax correctly.
An HMRC spokesman told the BBC: "The overwhelming majority of PAYE cases - over 40 million - are right, so most people have paid the right amount of tax.
"But for a variety of reasons in some cases there will be a discrepancy.
"The government accepts that the way we go about deducting tax at source needs to be much more accurate and the introduction of the NPS [computer system] paves the way for a real time system which in turn boosts accuracy."
In June, the government ordered a review of how the PAYE system works and is encouraging the public to contribute with their ideas about how it could be improved.
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