P800 Letter and ESC A19

andy1975lanc

Hi there,

Huge apologies if this has been answered elsewhere, I did a search and all the other posts that talk about this particular issue are for people under slightly different circumstances than me...

OK, I received a nice letter (P800) on 21/02/2012 from HMRC saying I owed £3,643 in underpaid tax which to say I was shocked is an understatement. This is for the years 5 April 2010 and 2011. Once I confirmed my employer has been paying my tax for me and not just kidding around, I called HMRC. The lady said that whilst I underpaid by £1 for 2011, the vast bulk of the amount owing is from 2009 - 2010 tax year. My first thought was there'd been some mistake, but looking through old payslips and tax records, I realised where the issue had arisen from.

I was made bankrupt in December 2008 due to a business I was running going to the wall, so in Feb 2009 I was entered into a Income Payment Arrangement. At this time in my interview with the official receiver they said that I would be put on an NT tax code whilst the Inland Revenue looked at my earnings from this point forward (I left the self-employed world and became an employee in 2007). They would then set my tax code and notify my employer of this code so tax could be collected. 5th August 2009, HMRC produced a letter saying that for tax year 2010 I would be 647L tax code, however my employers didn't receive this notification until Nov 2009, so I was still on NT for the months 04/11 - 10/11 hence the shortfall in tax (I pay approx £500 per month in tax).

My question is this, can I ask for the tax to now be not be collected under ESC A19 as they have taken nearly 2 years since the problem year to notify me of the shortfall even though they had sorted my tax code and therefore surely should have been aware by now that I'd underpaid? I don't like being naughty and not paying tax, but I honestly can't afford the full amount or even the £150 a month they want so I can have this paid back by 2014.

Thanks in advance for any advice or help you can give me.

Cheers

Andy

System

Since HMRC put you on the NT code in the first place for the year of bankrupcy (08/09) then they should have changed it back to the normal code the following year (09/10) so you should have received that corrected code prior to the start of the 09/10 tax year.

Appeal under ESC-A19 as HMRC failed to use the information they already had until too late in the 2009/10 tax year and allowed a taxpayer already struggling through bankrupcy to incur yet another debt through no fault of their own.

One thing though, the code issued in August 2009 would have had a note on it stating that you might owe tax for that year. If it did then HMRC might determine that they warned you that you might underpay tax in that tax year.

Check your coding notice.

intimidated

My daughter has appealed under ESC A19 in December 2011, and we are still awaiting a reply, but in the meantime HMRC are demanding payment of arrears of about £700 from 2007 . Whilst payment can be postponed if a review or appeal is lodged, I cannot see anything in the rules allowing payment to be postponed whilst an application under ESC A19 is made. My daughter is to be made redundant in a few weeks, and HMRC say she will incur penalties and interest if the amount is not paid.

AirlieBird

Pam17 wrote: »

Appeal under ESC-A19 as HMRC failed to use the information they already had until too late in the 2009/10 tax year.

But they still issued a tax code in the tax year which an underpayment occurred so that in itself isn't grounds to appeal under ESC A19. Issuing a tax code should have resulted in the correct tax being deducted, regardless of the month it was issued, unless it was a non-cumulative tax code. Was there a M1 after your tax code?

andy1975lanc

Thank you all for your replies, seems it might be worth lodging an appeal and seeing where I get.

AirlieBird: Nope, the tax code was just 647L. Also in reply to Pam17, in the letter they never mentioned anything about collecting back dated tax, they just say that my company needs the tax code to collect the correct amount of tax every month.

AirlieBird

Hmmm.... then I don't see how you should have underpaid tax. All the tax due between April and November should have been deducted from your salary in November. Although this would probably have left you with no income so perhaps your employer decided not to do that?

You can appeal, but it will get you nowhere. From what you've said HMRC acted on all they information received within the timescales allowed.