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MSE News: Thousands more could get tax written off using HMRC loophole

in Cutting tax
54 replies 49.5K views
This is the discussion thread for the following MSE News Story:

"Hundreds of thousands more workers could escape paying underpaid tax using a little-known concession ..."


  • Old_WrinklyOld_Wrinkly Forumite
    5.2K Posts
    Will there be future articles on how to avoid paying tax by using overseas tax havens?
  • MikeyorksMikeyorks Forumite
    10.4K Posts
    Part of the Furniture Combo Breaker
    How on earth is it 'a little known concession' or 'dug deep in the HMRC rule book'?

    Everyone who has an underpayment has had at least one P800. Enclosed with that P800 was a double sided leaflet entitled 'What Happens Next?'.

    On the face page at Para 3 and under a bold heading it clearly says :

    If you think that we should have already collected the tax due in your P800 Tax Calculation because the information had already been provided to us either by yourself or a third party, and we have failed or delayed to use this information, then in some limited circumstances we may agree not to collect it. For example, where employers or the Department for Work and Pensions have sent us information and we delayed using this information when it was reasonable for you to think your tax affairs were in order. If you think this may apply to you then please contact us giving full details using the address or phone number shown on your P800 Tax Calculation and we will decide whether you have to pay the tax included in the calculation.

    It may not mention ESC A19 by name. But the whole gist, plus the additional potential opt out if the employer has been negligent (Para 2 of the same leaflet) is clearly set out :-
    If you want to test the depth of the water .........don't use both feet !
  • stphnsteveystphnstevey Forumite
    3.2K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    Will bookmark if need to use it
  • dnseydnsey Forumite
    8 Posts
    Does anyone know how long it takes HMRC to make a decision on an appeal? I wrote to them several weeks ago, and have still not even received an acknowledgement.
  • Thank you money saving expert.

    I read the article referenced in the weekly email. So phoned the tax office today and they agreed to write off the tax I owed them!

    In short I got a tax notice last month saying I had underpaid by over £1400 in 2007/2008. Got my new tax code last week with me repaying it over the next 12 months. The first person I spoke to today said I had no claim, I insisted and got passed to another department who agreed they had not responded in a timely manner to information for that tax year so I'm £1400 better off than I was this morning only thanks to the information on this website.

    Time to celebrate tonight!
  • I think it is disgusting that the tax is being written off. The rest of us earning similar amounts have paid all our tax and some of us stuggled on low incomes but still paid the correct amount of tax. Those who underpaid have had free money. What about the rest of us who paid correctly. Im sorry but its your own fault if you didnt check your tax code. Ignorance is NOT and excuse. This country is in a mess and we should all pay our dues. If your bank account was wrong you would soon be on the phone sorting it out whether you knew about the banking system or not. A19 isnt a law its a concession and should be used only in extreme case not for all the people trying to avoid tax.
  • edited 23 March 2011 at 10:40PM
    dnseydnsey Forumite
    8 Posts
    edited 23 March 2011 at 10:40PM
    It's unfortunately not as simple as just checking one's code. In my case, I was allocated the correct code, but this was notified to two of my employers instead of just one, as C&R apparently seemed unable to decide which was my 'main' job - a decision which I could not make for them. I therefore effectively received two personal allowances.
    I'm sure that others have experienced more complex situations, where it's virtually impossible for the layman to determine how their tax should be collected.
    A19 is indeed a concession to those of us who provided correct information (and made the appropriate checks), but C&R nevertheless persisted in collecting the wrong amount of tax.
  • MikeyorksMikeyorks Forumite
    10.4K Posts
    Part of the Furniture Combo Breaker
    dnsey wrote: »
    I therefore effectively received two personal allowances.

    And you didn't receive payslips (showing the same Code in operation by each)?
    If you want to test the depth of the water .........don't use both feet !
  • chrismac1chrismac1 Forumite
    2.6K Posts
    If you listen to HMRC posters, you should diligently check each and every tax code on your payslip. You should inform your employer when they have it wrong and jump up and down to get them to change it even if they refuse. You should continuously be aware of the tax laws of the UK, and in particular you should always know exactly where the 40% tax point begins and exactly when you have gone £1 over that, at which point you'll inform HMRC. Thank God the Tribunals are not stuffed with people who take this view of the duty of care of UK taxpayers!

    Conversely, HMRC know exactly where the 40% tax point begins. In the 20th century - never mind the 21st - it is entirely reasonable to expect them to take the data from two separate P60s under the same NI number, add them up, subtract the 40% tax point, and send out a bill by 30 June following the end of the relevant tax year. Whether this is the duty of care expected of them by the Tribunals remains to be tested. But I believe 90%-plus of Uk taxpayers think this is an entirely reasonable duty of care for HMRC to perform to.

    Instead HMRC has fallen so far short of this they are a national laughing stock. Personally I don't think there is genuine will at any level to "wake up" and sort out the mess, and the 4 day long "outrage of an outtage" of the entire HMRC database in early April is yet one more example of this, were it needed. They have until the end of the tax year following the time of receipt of the information to put things right, something like 22 months. I get 30 days from HMRC if I want to appeal one of their silly fines. Yes they should write off the losses just like any commercial organisation - BP for example - has a big write-off when it messes up big style. The only difference being that with BP heads roll, but with HMRC they just keep nodding along.
    Hideous Muddles from Right Charlies
  • I was working and also had a small business. i had a tax invrstigation which was reduced from £20,000 to £3000 which were fines and interest for bad book keeping. I was told that if i settled then it would be closed. if not they would go back another few years. they invetigated 05/06 and was told they could not go back beyond this.
    I have now received 3 letters apologising for not having chased the debt before but they now want to reclaim interst i received on an refund given during these investigation years and as far back as 02/03
    I have asked for a breakdown on how this has been calculated and was told i would have one in 24hrs. 4 weeks later i am still waiting. I overpaid about the same amont they are requesting back, i have heard nothing about this and the operator was unhelpful and did not understand it either.

    any advice

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