Does anyone understand ESC A19? Underpaid tax

heidi279

Hiya All

Thanks so much for your replies - I think it is all a little clearer now - I am really grateful to you all for your replies and as I sent the ESC A19 letter the other day I will keep you updated. Kind regards to you all Heidi x

Les1396

Hi Folks.

I am the original ‘Neanderthal’ when it comes to matters finance and at the moment seem to be at ‘sixes and sevens’ with HMRC (Income Tax underpayment).
Up until today, I was employed part-time as a van driver recently earning on average about £250 per month to bolster my occupational pension. I am now unemployed.
In October 2010 I received a notice from HMRC that they had reviewed my 2008/9 tax year and found that I had underpaid by £724.
Following this bombshell, I made an appointment to see a Tax Officer at Lincoln HMRC Branch. I wanted to know how, after me filling in my tax returns etc, this had come about. I also wanted ‘time to pay’. (I didn’t think any of my personal circumstances had changed). I was told that ‘she was not here to apportion blame’ and it appeared that my tax allowance was split between my pension and wages at that time. I did inform them by telephone that due to a ’drop-off’ in my wages, that if the split system remained, I was unlikely to pay HMRC enough income tax so I was told they would attach my whole allowance to my pension, (which is large enough to see me through all the tax bands up to basic rate). I asked that my wages be taxed thereafter at basic rate. I was told in the interview that it appeared that my whole allowance was attached to my pension but they had left the split-half still attached to my wages. This meant (in my mind) that I was receiving 1.5 times my yearly allowance – hence the underpayment.
I wrote to HMRC setting out these details and asking the following;-
a) How this underpayment came about?
b) Where the blame/fault lies so that I can focus my ‘active interest’ in that particular direction?
c) What benefit was I to expect with my tax code being split between my pension and wages?
d) How are you suggesting the underpayment be settled? (I was told at the interview someone would write to me within 3 weeks – this letter was written 5 weeks after the interview – no one had written back).
e) Why Lincoln Tax Office do not have full access to my computerised records?
(The nice lady in the interview told me she could not tell me why the tax allowance was split as she did not have access to the records on which that decision was made) (??)
After ‘no reply to this for 2 months’, a letter to my MP who in turn wrote to the Chief Exec HMRC I received the following answers. (word for word here folks)

a) The underpayment arose because you received more personal tax allowances that (he/she means ‘than’ I think) were due. You are only entitled to receive one set of personal tax allowances per tax year. (This guy is good!)
b) You are obliged to inform HMRC about all income that is not being fully taxed. You had income that was not being fully taxed but you did not inform HMRC. (no details of the ‘untaxed income’ so I have to guess what it was. According to my tax return there was no more income and so I am obviously a criminal?)
c) When the PAYE code for operation against R.I. (my employer), was calculated, it was based on an estimated gross pay of £2804 which would leave a balance of allowances to be set against other PAYE income so that you would receive your full entitlement. (I really do not understand this at all).
d) The underpayment is due to be collected via a restriction in the PAYE tax code commencing 6 April 2011 against your L.P.A. income. (Represents a 5% pay cut for me!!).
e) I cannot comment on the non ‘access to computerised records’ at Lincoln Tax Office. Please direct any query regarding it to that office.

I had another appointment with the tax office at Lincoln today following another ‘no reply to ‘the points raised above’. I am told that HMRC have now looked at my 2007/08 year any the amount of underpayment had gone up to £1627.18. So, I must have upset someone. Also, I am told my complaint (last letter) has gone into the Ministerial Complaints File and will be answered in due course.
Is it possible to have copies of your previous tax returns because I am sure I declared interest on bank accounts that had already been taxed by the bank?
Any chance of one of those EXTRA STATUTORY CONCESSIONS (ESC A19)’s being successful do you think?
Sorry about going on but this may strike a chord with other unlucky honest tax payers out there!

Mikeyorks

Les1396 wrote: »

Is it possible to have copies of your previous tax returns because I am sure I declared interest on bank accounts that had already been taxed by the bank?

Are we talking Self Assesment (SA) Returns?

If that's the case you can surely Login and view them? But - if it is SA - then there is no chance of ESC A19 applying as you have been self assessing

Les1396

Thanks for the reply. I have been completeing Self Assessment returns (paper - not on line) and other than my pension rising about 2-3% per annum, nothing much has changed. My Tax allowance Code has dramatically changed several times from 2006-2010 though. HMRC accepted my computaions and for 2010 they said I no longer need complete self assessment. It would seem that they have acted incorrectly on the info I have given them. Looks like I'm going to have to invest in a Professional to sort this as I am swiftly sinking in the bog.

suso

Les1396 wrote: »

Thanks for the reply. I have been completeing Self Assessment returns (paper - not on line) and other than my pension rising about 2-3% per annum, nothing much has changed. My Tax allowance Code has dramatically changed several times from 2006-2010 though. HMRC accepted my computaions and for 2010 they said I no longer need complete self assessment. It would seem that they have acted incorrectly on the info I have given them. Looks like I'm going to have to invest in a Professional to sort this as I am swiftly sinking in the bog.

what information have they acted incorrectly on?

If they said you don't need to complete taxes returns for 2010, that that implies you were completing them for previous years, which mean they were going off the information you have provided.

your tax allowance would have changed mutiple times during 2006-2010 due to budget increases in your personal allowance each year.

can you elaborate a bit more ?

Les1396

I started working for my present employer in 15/2/2006 Code 489L. On 16/12/06 it was changed to 503L. On 18/2/07 it changed to 515L for the 07/08 tax year. On 10/7/07 it was changed to 280L for the remainder of that tax year. On 17/2/08 it changed to 301L for the 08/09 tax year. On 17/8/09 it changed to Basic Rate which it is still at. As far as I know my Employer and Pension provider taxed my income at the requested codes. I know it changed to Basic Rate after I visited the Lincoln Tax Office to tell them they are not collecting enough tax from me on the 301L code and my allowance being split between my wages and pension. Since 2006 my savings have gone down (not much invested in 'untaxed' accounts - its in Premium Bonds, ISA's etc), my annual wages fluctuated between 8K and 2K and my pension (now running at approx 18K) has increased bout 2-3% per annum. It seems a little weird that HMRC can let underpayments roll on for years without informing you. I thought I was doing my bit (and they theirs) however that was before the £1627 bombshell. I am on PAYE (I think) and up to 2009 completing a tax return each year. Cheers for now (its getting boggy in here), Les.

John_Pierpoint

Did you not pop into "Mr Patel's" 7 - 11 store and take a photocopy of your tax returns before sending them in?

If you post the figures for each year, I'm sure someone on here can work out the tax payable and if you have the tax actually paid figure we can work out if HMRC have got the correct figure for the underpayment.

Without hard facts, I don't think you will get very far in proving that HMRC did not act on what you told them.

For what it is worth, you are not alone; at least you are not on a "K" code (yet).

heidi279

So after 3 months we get a reply from Tax man - we DO have to pay all the money back - they didn't even answer the questions I asked about ESC19! Not that I expected any help from them anyway! Thank you to you all for your help though x

7roland8

Yes we have £550 to replay - they got hubby's incapacity benefit amount worng for 09/10 - never hapened before - but as said - made to feel like criminals - ans told - 'whatever is wrong with your tax - its your fault'.

Have t pay back at £15 a month for 3yrs - though after other bills etc we only have about £60 left for food and emergencies car repairs and fuel.

After seeing all those who have won wih this A19 think I might try - as we did believe we were paying the right amount of tax on hubby's pension - and never hid anything.

John_Pierpoint

There is an explanation of the time limits applying to an ESC A19 claim on this thread:
https://forums.moneysavingexpert.com/discussion/3112156