ESC19 and/or HMRC errors?

saysummatnice

I am (mostly) retired and HMRC wrote to me on 22 Nov 2011 to inform me of an underpayment of income tax in the year 2009-10, alleging I owe £1800+. I've always paid tax via PAYE and this was a complete surprise to me.

After some delay by HMRC (saying letters can gone astray in the post, in December) I have established that they have correct information on my income from my Teachers pension, 2 part-time jobs and 2 annuities. However they have overestimated my state pension by around £4,000 p.a.

After reading the information on MSE about ESC19 I plan to make a claim on this basis to HMRC, as it is over 18 months since the end of the relevant tax year but also because in Month 6 of that year I was awarded a tax refund (so there must have a been a review of my tax situation). At that point, too, my tax code went from 107L to 637L. When I looked at my records I'd had a letter from HMRC in Feb 2009 saying it would be 107L in the year 2009-10, and correctly stating my state pension, but no info from them about the tax refund or change in code, other than what was later in my teachers pension payslip of Month 6.

Also in the letter on 22 Nov 2011 HMRC said, at the end: "This underpayment will be collected through your tax code during 2012." There was then a space and a new paragraph where it continued: "Your PAYE code was reduced during the year and you were notified of an estimated amount underpaid. The actual amount is greater." This is not so - I was never informed of an underpaid amount - I assume it means in 2009-10, and of course I did in fact receive a refund!

My question is this: should I begin by making a claim based on ESC19 and leave aside their inconsistencies and errors for later (if the ESC claim fails) or put it all down in one initial letter?

I'd be very grateful for any helpful views on this, based on your experience.

Pennywise

First thing is whether the demand is right or wrong. You say they have overstated your state pension by £4,000. If so, that means their demand is wrong and you need to write to tell them they've got it wrong and ask for it to be corrected - send a copy of your annual pension notification letter for the relevant year to prove it

That's nothing to do with the ESC which is for where their figures are right, but they've not acted upon information within the allowable timescales. I don't think you should go down the ESC route just yet, if at all. You may find that once they correct what you say is their error, there'll be little or no tax due anyway so asking for a concessionary write off (which is what the ESC is) won't be relevant.

saysummatnice

Thanks so much for this very reasonable comment, Pennywise - I hadn't thought of it that way round and, barring any other comments which seem to contradict this for some good reason, that is what I will do. Even with the miscalculation on the part of HMRC I think there may be some tax owing, though - despite putting in hours of calculating and thinking - I'm not sure at this stage.
Thanks again.

saysummatnice

Following on from my last post, I challenged HMRC figures, which they accepted.

However I still owe some tax from 2009-10. I wrote claiming the ESC A19 exemption mentioning their delay and the fact that they had all the info (including the fact that they had paid me back some tax from that year saying I had overpaid). They accept all this but then say they can't accept the ESC A19 "because the tax that you owe was large enough for you to notice."

I see from other threads that I am not the only one who has been given this reason for non-acceptance of the ESC A19 claim.

They offer a form where you can submit additional information, but I would welcome some advice please:).

I have always been led to believe that HMRC took my tax correctly through PAYE as almost all of my working life I have just had one full or part time job and there has never been a problem with tax collected. When I retired I first took the state pension, plus occupational pension, plus one (and sometimes two) occasional and very part-time jobs. Then a year later, in 2009 I claimed two small AVCs (private pensions). They did send me two P161s shortly after this which I returned. The calculations for tax became more complicated but as I knew I was being taxed at what I considered was broadly correct (20%) on everything except my State Pension I didn't think anything was wrong. I didn't expect HMRC to suddenly change its spots.

Would this cut any ice do you think? All this has left me nervous that in future HMRC will be asking for back payment again when I don't expect it and my fairly careful budgeting of my many, but small, income streams will go out of the window. In addition I have chronic fatigue syndrome which, sometimes, does mean I have trouble concentrating, and retaining information.

Any further advice on a route to follow would be appreciated, even if you think I have exhausted every possibility.

chrismac1

If you look at quite a few of the other Esc A19 posts on here they required 5 or 6 attempts before HMRC did the decent thing. If you've never dealt with them before, please don't expect efficiency, decency or integrity and you'll never be disappointed!

Their views on what a taxpayer will or will not notice are entirely their own, in my view and that of most accountants entirely unreasonable. You were going through a major transition, probably the most complex tax situation in your whole life so far. In my view HMRC are bang out of order taking this line with you.

Given your illness you might need a helpful advocate, or you need to consider whether it is worth another few letters spanning 6 months to a year before you get the right decision.

I've been dealing with HMRC and their predecessors since 1990 and it's never been worse than it is now. They seem to have a recruitment policy of rejecting anyone with an IQ above 100.

saysummatnice

Thanks for your reply. I've seen this site mentioned on this forum so will probably try the website mentioned by another poster that helps older people with tax affair: taxvoldotorgdotuk (the forum tells me I cannot post the link as I am a 'new user') for some advocacy, as you suggest.

On further reflection I realise that when my tax code was changed in 2009 and I got the refund I thought it was to do with my change in circumstances - it seemed then that the calculations would be too complicated for me to check so I trusted HMRC to have got it right. If I'd thought otherwise I wouldn't have spent the money I now know I owe them.:(

I'll soldier on ...

Mikeyorks

saysummatnice wrote: »

because in Month 6 of that year I was awarded a tax refund (so there must have a been a review of my tax situation). .

Are you sure this isn't 08-09? When everyone got a 'refund' in Month 6 of that year - as the Personal allowance was increased by £600 in the September as a 'whoops' for Gordon getting the abolition of the 10% tax rate wrong.

but then say they can't accept the ESC A19 "because the tax that you owe was large enough for you to notice."

That's not wholly surprising? On your figures of £1800 owed - that is £9000 minimum you had tax free? I don't think they're going to give up on that too readily. Even if that has had the 'overstated £4k' removed - it's still substantial.

But a bit more specific rather than generic detail might help?

saysummatnice

Thank you for reading my query, and your reply.

In answer to your first question: no, it was definitely 2009-10 that I was awarded the refund.

When I told them their original calculation of over £1800 owed was wrong they recalculated so that I now owe, perhaps correctly, just over £1000. I haven't looked at the payslips yet (online) but can't imagine I wouldn't have noticed over £400 pcm extra - though there are added complications as the annuities had just kicked in, plus at the time I thought that all these adjustments they were making were as a result of that, and my retiring in summer 2008. It's all getting a bit much for me to handle so, as I mentioned, I am going to try and get further help from the website offering tax advice/support to the over-60s.

saysummatnice

Just to let everyone know that after 5 or 6 letters to and from HMRC they have finally agreed that I do not have to pay, plus they re-arranged my tax code and refunded me the other part almost immediately .

This did take over 18 months and HMRC letters gave different reasons for rejecting my claim each time they wrote - Kafka's books must be very popular in the tax offices

Included in my final letter was a statement that I felt I could not be sure that they would not ask me again in retrospect for PAYE tax and that this was causing me considerable anxiety. In their final letter they agreed that I had given them all the information at the time, which they had proceeded to ignore.

So many thanks to forumites who have replied and been supportive.

Thanks must also go to taxvol dot org dot uk - they give tax help to the over-60s (though you need to earn under a certain income) who were very supportive and informative over the phone. I must contact them to let them know.

Pennywise

Pleased to hear that you were eventually successful. Gives hope to others who are in a similar position not to give up when HMRC are in the wrong.