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

Allymay

Thank god for MoneySavingExpert.com!!! :A

I received two P800 Tax calculations totalling £2254 of underpayments relating to Health Benefit that hadn't been taxed for 08/09 & 09/10.

I have just followed Martins suggestion of making a claim on the ESC A19.....my complete £2254.00 of underpaid tax has been written off!!! :j

This is after weeks of battling with various advisors at HMRC. I even took it to my husbands accountant to see if there was anything they could do, but couldn't!

Please do make that call and claim under A19....good luck

imountain

missnelly1 wrote: »

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.

Sorry you feel that way but after your little rant lets look at what ESC A19 is actually for.

Tax is confusing to many people, ignorance in not the issue. We live with one of the most complicated taxation systems on the planet with an awful lot of things that can be set against us for taxing (in my case a company car and car fuel) and some labrynthine ways of taxing them (in my case car tax alone is based in an ever changing rates and formulas currently based on CO2 emmissions, original cost, fuel type, and engine size). So as most of us are not unpaid tax experts we expect the paid tax experts (HMRC and yes my tongue is firmly in my cheek refering to them as experts) to get the sums right if the right information was sent to them on time.

ESC A19 rules will ONLY drops tax which was due in previous years IF HMRC got its numbers wrong despite having the correct information to base its calculation on at the time and failed to let you know for over a year.

In other words to get anything knocked off HMRC have to have been given by you or your employer the correct information before they made the calculation but still C***ed it up anyway.

In addition HMRC must have not sorted this out within 1 whole tax year of originally c**king it up!

And then of course to be claiming exemtion under A19 it means that HMRC have C**'ed it up, are not chasing you until over a year later and rather than writing it off (knowing the A19 rules made it not payable) sent you the bill anyway hoping you wouldn't know enough to have it written off! Lovely behaviour from the state.

From the taxpayers perspective this equates to years afterwards HMRC come after you and claim you underpaid tax, demand that the tax be paid, neglect to mention that they f**'d up the calculation in the first place and left it over a year to tell you dont bother appologising at all in their correspondance for this and only mention in a vauge way in an accompanying document that there might be certain grounds when "they might let you off" like you have done something wrong in the first place. Add to this that the tax man may even come after you for three tax years 07/8 08/9 09/10 as he did for me because you guessed it despite having all the correct info since 2007 and every year since HMRC got all three years wrong and came after me for the lot despit knowing that A19 applied to the first 2 years and indeed applied to the third under exeptional circumstances when they came after me for the first 2 as well!
Oh and by the way the lady I spoke to at HMRC tried to trick me into stating something that would have invalidated my claim before agreeing it applied, devious or what!

If you failed to give HMRC the right info A19 does not apply.
If the tax man contacted you reasonably quickly after the mistake (within the next tax year) A19 does not apply.
If HMRC calculated your tax it correctly A19 does not apply.
If you missled HMRC at all A19 does nto apply.

"Ignorance is NOT and excuse" Direct quote from you. I say about time that the so called tax expert HMRC stoped using the law as an excuse for its own ignorance or do I mean incompetance.

I also think its well passed time that HMRC stopped claiming money it knows it is not entitled to (in my case had they not claimed for 07/8 and 08/9 which they were well too late under A19 rules to claim back I would not have been able to claim exemption for 09/10 under exeptional circumstances clause.

For info the exeptional circumstances clause means its unreasonable for HMRC to claim back any liability built up over more than one tax year that it has caused by its own failures to calculate the tax correctly despite having the right info at the time it made those calculations.

So in my case the HMRC greed in going after me for three years knowing it was actually too late for two of them cost them the tax in the third.

Now I have evaded nothing, I have dutifully given HMRC the correct info on this company car from day 1, I have genuinely not realised that HMRC had got it worng and throught sheer HMRC incompetance they have had to write off £1,500 of tax. Sorry not appologising for that. After their catalogue fo failure for over three years they thought it was OK to charge me £1,500 becaue they are the state and you expect me to accept it. B***er that, you wouldn't expect me to pay it if my gas provider came at me more than 3 years after the even to say oops they had me on the wrong tarrif so could I pay them £1,500 o and buy the way we are not asking nicely!

Anyone claiming exemption under A19 Good Luck:beer:

Ian.

imountain

chrismac1 wrote: »

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.

Absolutely correct.

Government and its departments seem to think rules of reasonable behaviour apply one way only and forget entirely who they work for, us!

By the way, the current backlog at HMRC means that if you write to them your letter will not get read let alone acted on for more than 60 days!

I found this out off my mum who still works (despite being over 65) for a gov't department (DeFRA) as the gov't wants us all to work to a ripe old age now. They chased her for £7,000 of unpaid tax which by the way they were wrong about (she is low paid and doesn't earn enough to owe pay £7,000 in tax let alone owe it as extra from a year) there was no unpaid tax it turned out in the end.
They did however put her through the wringer and worry her half to death with demands for payment within 30 days and over a dozen different tax codes (notices of coding) for months before admitting on the phone to their being more than a two month delay on looking at post and that she was OK to ignore the 30 day demand for payment she did not any longer owe!

Delightful behaviour of the state to an OAP!

:mad::mad::mad::mad::mad::mad::mad:

I bet the open it and process all payments straight away though!

chrismac1

You are entirely correct in your assumption. I have a client whose accountant died with all my client's PAYE records in her garage - my client is an employer. Every quarter I worked out the PAYE / NI due. My client is over 60 so prefers to pay by cheque. Along with each cheque I enclosed a letter explaining the situation, that my client did not know her full PAYE records and hence I might have the wrong reference, but if they'd write to my client with the proper details we could sort it all out.

No reply to 4 letters. 4 cheques cashed, none of them allocated to my client who they are hounding for overdue PAYE. Enough said.

Pennywise

missnelly1 wrote: »

I think it is disgusting that the tax is being written off. ..... Im sorry but its your own fault if you didnt check your tax code. ..... should be used only in extreme case

Tripe and you know it. For years, if not decades, HMRC have always reviewed pensioners/employees tax affairs a few months after the year end - usually August to November were the peak months. They would then issue amended tax codes and raise demands or issue repayments if necessary. In fact (though now it has surprisingly disappeared) the HMRC booklets/website used to say something along the lines of "we will check your tax affairs after the end of the tax year and tell you if you've over/underpaid tax". Then some bright spark executive forgot about the annual reviews and they weren't done for a few years. Then suddenly they're started again, not just for the current year, but for earlier years as well, hence the 3 years catch-up.

It was perfectly reasonable for people who had never had to check their own tax affairs in the past to assume that they needn't do it for 07/8 onwards - many people were accustomed to the annual "check" by HMRC. There is no law requiring the average employer/taxpayer to check their tax affairs. Official HMRC documents show that, eg, for taxable disability benefits, it is the DWP responsible for deciding on tax treatment and telling HMRC if necessary.

Had HMRC been up front and made a public announcement that they weren't doing the annual checks and warned employees/pensioners to check themselves, then it would be different. But, for people who had previously "enjoyed" HMRC doing the annual checks, those who've never had dealings with HMRC etc., it is perfectly "reasonable" that they thought their affairs were in order and hence the concession rightly applies.

HMRC are wholly responsible for the lost tax written off. What is annoying is that it's not the senior civil servants who presided over the fiasco who have to pay for it - they'll continue to get their gold plated pensions, knighthoods, etc. It's the taxpaying public who are paying for their stupidity, along with the tax officials who have to try to deal with the fall out.

Sadly, in this and lots of other areas, HMRC have lost the respect of the general public and that will take a long time to recover, if any. Trouble is, HMRC officials like the rules when it suits them, but like to try and ignore them when it suits the taxpayer. Just try making a claim or submitting a return a few days after a deadline - just try invoking an extra statutory concession when you're slightly the wrong side of the line - then you find how HMRC "love" their rules. It's entirely fair that those same rules loved by HMRC officials protect the taxpayer as well - hence why the ESC A19 must be allowed to stand and protect the innocent in this fiasco.

bobpandya

my underpaid tax for 2007-08 and 2008-09 for 970.00 pounds just got written off because of the ESC A19 loophole. Thanks to this website.:T

Robyn552

Hi, I received my first demand for underpaid tax in November for £1492, I have now been informed that I owe more which now totals £3400. I can't beleive this has been allowed to happen, when I have rang them they just keep saying it was my responsibility to check I was being taxed correctly. I have worked for 24 years and have always had part time jobs as well as my full time job, call me ignorant but I always assumed once they had my NI No I would be deducted correctly. They rang me yesterday to make an arrangement for payments over 36 months. I keep hearing about an A19 clause, how does it work and who does it apply to?

roddydogs

It seems the "opening Gambit" by HMRC is to say "ESC A19" dosent apply to you.You will have to fight for it by letter.

John_Pierpoint

Robyn552 wrote: »

Hi, I received my first demand for underpaid tax in November for £1492, I have now been informed that I owe more which now totals £3400. I can't beleive this has been allowed to happen, when I have rang them they just keep saying it was my responsibility to check I was being taxed correctly. I have worked for 24 years and have always had part time jobs as well as my full time job, call me ignorant but I always assumed once they had my NI No I would be deducted correctly. They rang me yesterday to make an arrangement for payments over 36 months. I keep hearing about an A19 clause, how does it work and who does it apply to?

Hi Robyn,

Welcome to mse.
Before anyone can realistically help you, you need to ask yourself these questions.
1. Am I self employed or working in a servant relationship and being taxed under PAYE?
2. Do I understand the concept of the tax year running from ddmmyy to ddmmYY ?
3. Do I know my date of birth?
4. Can I find out my (tax free) personal allowance for each of the last few years?
5. Do I understand the tax free status of some of my income streams eg pay into pension, ISA interest etc.etc?
6. (In addition to pay?) Do I have other taxable income streams eg out of pension fund, 2nd job, use if van etc. etc.
7. Have I kept my tax year end tax deduction certificates - P60's (if I was paying PAYE)?
9. Do I understand how income tax worked in each of the years in question?
10. Did HMRC know the answers to all these questions (and more) on time?
11. Have I read this thread from the start?

When you can answer and date at least these questions, we will begin to understand your problem.

John.

Kate_Austen

I have a similar dilemma having been issued P800 demands for years 07-08, 08-09 and 09-10 totalling over 3k. My circumstances are quite complicated but as far as I was concerned, my tax was being paid correctly. Thank you MoneySavingExpert for the relevant articles and advice on this and also many thanks to most of the posters above. I also went to the HMRC website and followed a link on there to the charity website TaxAid and found examples of letters that can be customised. I have used them as a guide and written to HMRC to claim that ESC A19 is relevant in my case. Re. the delays mentioned above with HMRC responding to letters, I will also phone them tomorrow! I hope I will be sucessful, as being a widowed parent, there is no way I can afford to pay that huge amount of money now. If I had been taxed correctly at the time, I would have budgeted accordingly, but to let it build up so much, expecting me to pay it now is unreasonable. Fingers crossed they will see sense and @Robyn552, I hope you can sort yours out too as I agree it is very scary. Go to taxaid.gov.uk and follow the link to PAYE taxpayers - unexpected bills or refunds and then the next link which starts 14 March 2011 will give the example letters.