Tax bill help!

chrismac1

Apologies, I copied and pasted from hMRC website and that was in bold there. I thought we'd established that for 07-08 there had already been a sufficent delay to make ESC A19 viable, hence for 07-08 reasonable belied is the only hurdle.

Pennywise

dori2o wrote: »

07/08 IB started but HMRC have not received the details from DWP and the customer has not made contact to advise.

According to HMRC manual http://www.hmrc.gov.uk/manuals/eimanual/EIM76180.htm I quote:-

"As they know the details of the claim, the DWP is responsible for determining whether IB is taxable and notifying the Revenue when a person starts to receive taxable benefit. "

So it is a Government body, the DWP, who is responsible for notifying HMRC. Remember re ESCA16, it doesn't say it's the taxpayer who has to notify, just that HMRC must have been notified.

Assuming that the taxpayer didn't notify, and hasn't done in the following years, then it follows that DWP must have told HMRC because HMRC now clearly know about it!

So the question is when DWP told HMRC - I'm sure that a taxpayer can find this out via a freedom of information request if HMRC refuse to divulge!

As to the reasonable belief test, the courts have held that what is "reasonable" depends on the person themselves, not what an employee of HMRC would think is reasonable. Given the above quote, I'd argue it was "reasonable" for the recipient of IB to believe that between the DWP and HMRC, the tax treatment etc would have been dealt with at the time, especially seeing as that quote does give the impression that there is doubt as to the tax treatment - a layperson could easily "reasonably" belief it wasn't taxable.

There have been successful claims under ESC A19 where pensions or IB awards have resulted in underpayments for 07/8 onwards so if that's the case here, then you should write in and make a claim under the ESC.

Also don't be put off claiming the ESC for 09/10 despite it allegedly being "in time" - look at the "exceptional circumstances" clause within the ESC which allows for the ESC to be granted where HMRC have allowed underpayments to go unnoticed for 2 years. So if it started in 07/8 or earlier, it's lasted more than 2 years, so all years including 09/10 should be allowed for write off.

chrismac1

Good post Pennywise. And to the OP don't give up if the initial claim is rejected. There have been various Esc19 cases which were rejected 2 or 3 times and then finally granted - I think this includes one on this site. So it looks like HMRC in this case could be doing a "high street bank mis-selling" and just bouncing more or less everything initially and then being more sensible when the taxpayer makes it clear he or she is not going away.