Does anyone understand ESC A19? Underpaid tax

heidi279

Oh dear - didn't want to cause a row - only came on here for some advice.

Thank you to those who have given supportive/informative responses. And thank you for understanding my position Chrismac/pennywise and russell.

Jennifernil - for your information, my husband is paramedic and I am a police officer - we both work full time shifts and foster children with disabilities on a respite basis on our days off (which means we do it through social services for no payment) My hsband recves a military pension for which he saw some horrendous sights, serving in Northern Ireland on numerous occasions at the height of the troubles and personally I think he deserves every penny he gets. We are both law abiding tax paying citizens who have always been happy to pay our dues, we have never been trying to "get away" with not paying what we should, however to repay such a large amount of money is disappointing. As you state you are a non-tax payer, does this mean you do not work and have plenty of time to surf the internet - unfortuantey I am not in that position.

I have learnt from this incident to keep ourselves informed but would still appreciate any constructive advice that can be offered on how I can do this. However if you just want to come on here and lecture then please find some other way to vent your social grievances.

Thank you to the helpful ones amoung you. I appreciate your time.

PS Letter sent to HMRC today - not holding my breath but we will see. H x

jimmo

Chrismac1,
As a once proud employee of the Inland Revenue, I can readily agree with an awful lot you say about HMRC in its present state but I wonder whether this forum is the right place for such arguments.
On this particular thread I cannot help the feeling that, you and others are giving the OP, heidi279, false hopes and encouraging her to waste her time.
Heidi279 has to deal with her particular circumstances, the law as it is and whether ESC A19 applies.
I am sure I don't need to tell you this but the law, as it stands, imposes a normal 4-year time limit for assessments to be made. So HMRC are well within their statutory limits to make assessments on heidi279's husband.
Under ESC A19, HMRC imposes upon itself a more rigorous time limit where HMRC is responsible for the delay but you and I know that the Courts, (in my days, the Commissioners) Tribunals, High Court, Court of Appeal etc cannot interfere if HMRC refuses to apply an ESC (Extra Statutory Concession).
There are, of course, alternative ways to take things forward if an individual is aggrieved where HMRC refuses to apply an Extra Statutory Concession. The Ombudsman is the most obvious way and, whilst I am not sure, I think Judicial Review is a possibility. However, either way heidi279 would have to establish that HMRC has broken its own voluntary rules.
In my days as a Tax Officer the annual assessment review took at least a year to complete and ESC A19 did not exist. Nowadays, if ever HMRC gets its computer systems right, it could take a day or two. However, heidi279 has to deal with the here and now.
Heidi279,
The way I read your posts is that since your husband got a job his forces pension has been taxed at basic rate and his personal allowances (normal code) have been allocated to his employment.
That would be perfectly correct.
If it just so happens that the first time that the combination of his forces pension and his employment income took him into higher rate (40%) liability was 2008/09 then, quite frankly, you have no chance of having the 2008/09 underpayment written off. That is because the first time that HMRC could have possibly realised that higher rate liability existed was after 5/4/09. If we assume that HMRC received the annual returns for his pension payer and employer in June 2009 HMRC had until 5 April 2011 to assess the underpayment and are well within time.
On the other hand, if the first time that the combination of his forces pension and his employment income took him into higher rate (40%) liability was 2007/08 or earlier then, despite the fact that HMRC have not chosen to assess the earlier years you have a very real chance of getting the whole underpayment written off, including 2009/10.
There are drawbacks which I will explain if necessary but you have to get the basics right first.
Do you know when your husband first became liable to higher rate or do you care to give details of the amounts of his pension and earnings for, shall we say, the last 4 Income Tax years so we can sort this out?

chrismac1

I agree that for 09/10 the OP just has to cough up. But for 08/09 under Esc A19 HMRC have 12 months from the point at which they had full information to make the assessment, so that would be June 2010. If they assessed by then, the OP has to cough up. If not, I think it's worth at least a letter.

I realise I may sound like a broken record to many of the HMRC staff past and present who are on here. But outsiders who have never dealt with HMRC before will mostly not realise just how much of a mess things are in, and just how bad their experience of our tax system is likely to be. My first dealings with Inland Revenue were in 1991 and I can honestly say that things are much, much worse than they were back then - and worse than at any point in the last 20 years too. Every week I have conversations with clients and potential clients who are extremely frustrated, often very angry, by the way HMRC have treated them. With very few exceptions these folk are decent, law-abiding, ethical people who are victims and not perpetrators of the mess.

mrkbrrws

chrismac1 wrote: »

But for 08/09 under Esc A19 HMRC have 12 months from the point at which they had full information to make the assessment, so that would be June 2010.

12 months after the end of the tax year in which it is received. (http://www.hmrc.gov.uk/esc/esc.htm)

Pennywise

mrkbrrws wrote: »

12 months after the end of the tax year in which it is received. (http://www.hmrc.gov.uk/esc/esc.htm)

Which is over-ridden as per the ESC if there are HMRc errors spanning more than one year!

jennifernil

heidi279 wrote: »

Oh dear - didn't want to cause a row - only came on here for some advice.

Thank you to those who have given supportive/informative responses. And thank you for understanding my position Chrismac/pennywise and russell.

Jennifernil - for your information, my husband is paramedic and I am a police officer - we both work full time shifts and foster children with disabilities on a respite basis on our days off (which means we do it through social services for no payment) My hsband recves a military pension for which he saw some horrendous sights, serving in Northern Ireland on numerous occasions at the height of the troubles and personally I think he deserves every penny he gets. We are both law abiding tax paying citizens who have always been happy to pay our dues, we have never been trying to "get away" with not paying what we should, however to repay such a large amount of money is disappointing. As you state you are a non-tax payer, does this mean you do not work and have plenty of time to surf the internet - unfortuantey I am not in that position.

I have learnt from this incident to keep ourselves informed but would still appreciate any constructive advice that can be offered on how I can do this. However if you just want to come on here and lecture then please find some other way to vent your social grievances.

Thank you to the helpful ones amoung you. I appreciate your time.

PS Letter sent to HMRC today - not holding my breath but we will see. H x

Heidi.....if you took offence then I apologise, but I did say I was not criticising you, or anyone in particular, rather making an observation on the lack of interest most people in UK show when it comes to tax.

I do have time to spend on the internet as I am retired, and not a taxpayer as my own pension is pretty small. Luckily my husband has a decent pension, but he also has more complex tax as his pensions are from 3 different sources, hence the need to find out more about our tax system.

I hope you manage to get it sorted out one way or the other before too long, it is never nice to have a possible tax demand hanging over you for ages.

heidi279

Hiya All

Jimmo- Thanks for your reply - I am happy to put his P60 figures on here as there nobody will be able to use the information for other reasons.

London Ambulance P60 - 2007 Pay £31923.22 tax paid £5656.48 final tax code 503L
Army Pension 2007 Received £3532.20 tax paid £777.04 final tax code BR (aboout £230 a month received)

London Ambulance P60 2008 pay £30928.30 tax paid £5386.18 final tax code 522L
Army Pension 2008 received £3532.20 tax paid £777.04 final tax code BR

London Ambulance P60 2009 Pay £41143.41 tax paid £7081.60 final tax code 603L
Army Pension 2009 received £3532.20 tax paid £706.40 final tax code BR

London Ambulance P60 2010 Pay £42470.31 tax paid £7198.20 final tax code 647L
Army Pension 2010 Received £3532.20 tax paid £706.40 final tax code BR

There is a large jump in his wages two years ago because he did so much overtime to pay for our home improvements (until then he didn't really do much overtime). Would I be right in saying that in the last two years his pension and wages have broken into the "higher rate" tax bracket and that is why he should have paid 40% on a portion of his wages?

Any help is, as always appreciated. H x

antrobus

Based on the above I'd say that my initial guess was correct and that the additional tax liability arises because the jump in earnings from 2008/09 has pushed OP's husband into the higher rate tax bracket. So roughly speaking, for 2008/09 the Army pension should have been taxed at 40% rather than 20% - which is why the tax demand of £708 is roughly the same as the £706.40 deducted under PAYE for that source. It's less for 2009/10 because they increased the higher rate band by some £2,600 plus the personal allowance went up by £440.

I would therefore suggest that OP's husband owes HMRC £357.80 for 2009/2010 and just needs to pay up. It might be worthwhile trying an ESC A19 claim for 2008/2009. It might well depend on whether HMRC consider that the taxpayer was entitled to a 'reasonable belief' that their tax affairs were in order.

jimmo

Heidi,
The first thing I noticed from the pay and tax details you posted is that your husband is on the standard code for an individual, currently 647L.
However, as ambulance staff on active service he is entitled to a fixed rate expenses allowance (£140 for 2008/9 onwards and £110 for earlier years since he joined.
Details of the amounts are here.
http://www.hmrc.gov.uk/manuals/eimanual/eim32712.htm
Look under Healthcare.
Its hardly going to make up for what he probably has to pay but it is worth claiming.
I will have a proper look at the ESC A19 question separately and write again.

jimmo

Heidi,
The pay and tax details that you posted do make it very clear to all of us that your husband first became liable to higher rate tax in 2008/09.
The problem then is when, exactly did HMRC first receive information which would enable them to see that higher rate liability arose.
Contrary to what many people seem to think employers do not report details to HMRC every pay day and so HMRC will first have had that information available to them when the employer's annual Return for 2008/09 was received. That will certainly have been after 5 April 2009, probably May or June.
mrkbrrws has already posted a link to ESC A19 but I think it is worth repeating here for convenience.
http://www.hmrc.gov.uk/esc/esc.htm
The key question now is "Did HMRC act on the information received by within 12 months of the end of the tax year in which they received it?"
As things stand it appears that they did. If the information was received by them in May 2009 that is within the tax year 2009/10 which ended on 5 April 2010 and they therefore had until 5 April 2011 to act upon it.
Sorry if I am spelling this out but the time limit is definitely not 12 months from the date they received the information. It is 12 months from the end of the tax year in which they received the information.
As a matter of personal opinion, I really do believe that is completely unsatisfactory and very poor service for HMRC to have failed to assess your husband's 2008/09 liability until now but the cold facts are that they have done so within the statutory time limit and within the limit of the Extra Statutory Concession.

I am afraid that I therefore believe that you have precious little chance of convincing your husband's Tax Office to do anything other than what they have done.
The other key point in ESC A19 is repeated failures by HMRC but again I think you have no chance on that.
The reason I asked you to give pay and tax details for 4 years was to check whether you husband had been liable to higher rate prior to 2008/09. If he had been there would have been some chance for you to invoke ESC A19.
I think you will be wasting your time trying to argue your husbands case on an individual basis but its your money that is at stake, not mine. I wouldn't blame you if you soldiered on as long as you look at it as a bit of a bonus if you were to achieve a result rather then expecting to win.
By the way, don't worry about causing a row on a forum. Some people like to stir it up. Others do so inadvertently. I have done that on a number of occasions but thats life.
Also don't miss out on claiming the fixed rate expenses covered in my previous post.