Esc a19

VFM123

Hi

Please accept my apologies in advance for thelength of this information. However, I’mlooking for advice/help; like most of us who pay tax via PAYE, I’m not veryHMRC savvy.

I’m aware that there is a whole raft of informationabout ESC A19 on the forum but I can’t find anything that answers my concerns.
____________

Some background information
I have always been employed(never self employed) and have always paid tax on my earnings via PAYE

I took early retirement from mymain employment on 30 March 2011

Since April 2011, I draw a smallworks pension from what was then my main employment

I have been drawing an HM Forcespension for about 15 years

I reached state retirement age inMay 2012 and immediately began to draw my state pension

I am married; my wife is also retiredand draws a small works pension as well as her state pension.

On 30 June 2012, I received a P800 from HMRC toadvise that I had underpaid tax for the tax year 2010/11 amounting to £712.40and that they would collect this underpayment through my tax code during2013.
I wrote to HMRC at PAYE, Cardiff on 30 June 2012 toseek remittance of this underpayment under ESC A19 rules, stating:

_______________

30 June 2012

Dear Sir

Personal Details Quoted
Tax Reference No: Quoted

Thank you for your tax calculation dated 20 June 2012 (which I receivedtoday) for the tax year 2010/11.

The calculation suggests that I have underpaid tax for 2010/11 amountingto £712.40. I was unaware that my taxaffairs were not in order. I had thoughtthat all the tax that I was due to pay was deducted under PAYE. I believe that the underpayment has arisenbecause you failed to take action upon relevant information already availableto you and in your possession.

I therefore feel that the 'exceptional circumstances' condition appliesbecause you failed more than once to make proper use of the facts you had beengiven about my sources of income; mysources of income have not changed and you will have been in receipt of P60information from both my xxx employer and also from my HM Forces Pensionprovider (xxxxx xxxxxx).

I am therefore requesting that under the provisions of ESC A19 that thewhole of the underpayment as shown on the P800 should be remitted.

I look forward to hearing from you.

Yours sincerely

_____________

I receiveda reply from HMRC today (28 July 2012) stating:

Dear Mrxxxx

Thank youfor your letter of 30 June 2012 asking us not to collect tax of £712.40 for thetax year 2010-11.

I am sorrythat you feel we have not dealt with your tax record in a correct or timelymanner.

Our Decision

We haveconsidered your case under Extra Statutory Concession (ESC) A19 which allows usnot to collect tax in certain cases. Fulldetails of ESC A19 are on the leaflet included with this letter and also on ourwebsite at hmrc.gov.uk/esc/esc.htm

We aresorry, but ESC A19 does not apply in your case and the tax is still due.

Reason for this decision
This isbecause we have no record of any information sent by you or a third party whichwe failed to act on. If you think thatwe have overlooked information that has been sent to us, please let us know:

Whatinformation was provided
When itwas sent to us
Who sentit

Pleasenote that the end of year pay and tax details sent to us by your employer isnot classed as information for the purposes of ESC A19.

You wereunderpaid for 2010-11 because you were due to pay tax at higher rate (40%) onsome of your income. You contacted us bytelephone on 22 February 2010 and provided us with an estimate of your income. Your code was reviewed and a revised codeissued using the information provided by you. Your income for 2010-11 was higher than the amount you estimated and asa result the tax code operated did not collect the correct amount of tax at40%. In this case, HMRC carried out its responsibilities. We acted upon the information we held andissued the correct tax codes. If youneed more information or have any further questions, please contact us usingthe phone number shown above. (they goon to say ‘or complete the slip enclosed’ with their letter).

_____________

As advisedat the beginning of this, I have only ever paid tax via PAYE and understoodthat my then employer and my HM Forces service provider would have providedfull pay and tax deductions made in the year 2010/11 (I have no reason to doubtthat they would have done otherwise).

Icontacted HMRC on 22 February 2010 because I had received a whole series of P2(PAYE Coding Notices) from them:

On 10 January 2010I was advised that my tax code against my HM Forces pension for the year 6April 2010 to 5 April 2011 would now be D0

On 14 February2010 I was advised that my new tax code for my then main employment for theyear 6 April 2010 to 5 April 2011 is 364L, which replaces 647L

On 14 February2010 I was advised that my new tax code for my HM Forces pension for the year 6April 2010 to 5 April 2011 is BR, which replaces D0

On 22 February2010, I was advised that my new tax code for my then main employment for theyear 6 April 2010 to 5 April 2011 is 380L, which replaces 591L (I don’t have any record of ever being toldit was 591L)

On 10 June 2012, Iwas advised that my tax code for my works pension for the year 6 April 2012 to5 April 2013 is BR

On 10 June 2012, Iwas advised that my tax code for my HM Forces pension for the year 6 April 2012 to 5 April 2013 is410P which replaces 810L

The P2s on 10 June 2012 may well be related to me starting to draw my state pension, but ...............

In all myyears of working I don’t think I’ve ever received as much correspondence fromHMRC as I have now received from them in the past 18 months. I contacted HMRC on 22 February 2010 followingthe receipt of the 4 P2s as, understandably I was and still am confused.

Surelythey should also have acted on the information which was provided to them withregard to the pay and tax deducted provided to them for the year 2010/11 by mythen employer and by my HM Forces service provider.

Gratefulfor your help and advice
Many thanks

antonic

The fact you started to receive your state pension in May 2012 is irrelevant, because thats in the 2012 - 13 tax year, the problem you have is in 2010-2011.

When in April 2011 did you start to get your works pension ? - was it after 6th April 2011 ? - if it was that falls in the 2011-12 tax year.

The problem I can see is that both your Forces Pension and salary together have made you a 40% taxpayer (per their letter) and you would have never have paid enough tax at 20%.

If they have sent you a calculation, can you please post the figures so we can check they are right ?.

The fact you are married is irrelevant, unless ONE of you was born before 6th April 1925.

Did you ring them and provide an estimate of your income as they say in their letter ? - I fear if you did this is the reason why you claim has been rejected, because they have acted on the information you provided.

If you have anymore questions please post.

jem16

VFM123 wrote: »

Surelythey should also have acted on the information which was provided to them withregard to the pay and tax deducted provided to them for the year 2010/11 by mythen employer and by my HM Forces service provider

To be honest I can't see esc a19 applying here.

For the tax year 2010/11, the first that HMRC would have been aware of your income from the 2 sources would have been at the end of year returns which would have arrived around June/July 2011 (of course this doesn't count for esc a19 purposes anyway). This is in tax year 2011/12 and HMRC then have until a year after the end of that tax year to do something. So that takes them up to April 2013.

Now according to them, you contacted them in February 2010 and gave them an estimated amount of your income which turns out to be too low. Did you give them an amount? Did you then contact them with a revised estimate after 6th April 2010?

Did you receive any P2 coding notices after that phone call? What were your codes for 2010/11?

The main problem with more than one income source is that you have to be very vigilant to ensure the correct tax is taken off and really should check at the end of each tax year. It's almost impossible for HMRC to get it exactly correct, especially where it involves a move from one tax bracket to the next.

It also appears that you knew about the problems arising from the 2 incomes in November 2010 as you had a similar underpayment from 08/09 tax year. Was there also an underpayment for 2008/9?

https://forums.moneysavingexpert.com/discussion/comment/38048296#Comment_38048296

Did you contact HMRC after that post?

VFM123

antonic wrote: »

The fact you started to receive your state pension in May 2012 is irrelevant, because thats in the 2012 - 13 tax year, the problem you have is in 2010-2011.

When in April 2011 did you start to get your works pension ? - was it after 6th April 2011 ? - if it was that falls in the 2011-12 tax year.

The problem I can see is that both your Forces Pension and salary together have made you a 40% taxpayer (per their letter) and you would have never have paid enough tax at 20%.

If they have sent you a calculation, can you please post the figures so we can check they are right ?.

The fact you are married is irrelevant, unless ONE of you was born before 6th April 1925.

Did you ring them and provide an estimate of your income as they say in their letter ? - I fear if you did this is the reason why you claim has been rejected, because they have acted on the information you provided.

If you have anymore questions please post.

Thank you for your reply. I think I'm going to have to bite the bullet here. It just becomes a tad confusing for my very simplistic mind in that I have always assumed that HMRC have the information from my employers/pension providers and then act on that. Haven't ever felt the need to contact them for the previous 40 years of working. Wish I hadn't called them now in February 2010 but the glut of P2s meant I had to contact them. Thanks again.

VFM123

jem16 wrote: »

To be honest I can't see esc a19 applying here.

For the tax year 2010/11, the first that HMRC would have been aware of your income from the 2 sources would have been at the end of year returns which would have arrived around June/July 2011 (of course this doesn't count for esc a19 purposes anyway). This is in tax year 2011/12 and HMRC then have until a year after the end of that tax year to do something. So that takes them up to April 2013.

Now according to them, you contacted them in February 2010 and gave them an estimated amount of your income which turns out to be too low. Did you give them an amount? Did you then contact them with a revised estimate after 6th April 2010?

Did you receive any P2 coding notices after that phone call? What were your codes for 2010/11?

The main problem with more than one income source is that you have to be very vigilant to ensure the correct tax is taken off and really should check at the end of each tax year. It's almost impossible for HMRC to get it exactly correct, especially where it involves a move from one tax bracket to the next.

It also appears that you knew about the problems arising from the 2 incomes in November 2010 as you had a similar underpayment from 08/09 tax year. Was there also an underpayment for 2008/9?


Did you contact HMRC after that post?

Thought that following the problem in 2008/09 this would/should have been sorted by HMRC. Not used to making contact them and hadn't really in previous 40 years of working. Going to bit the bullet on this one and just get on with things.

Thanks again

p.s. Sorry had to remove the link you included as the site won't let me submit a reply with it included as I'm a new user

jem16

VFM123 wrote: »

Thought that following the problem in 2008/09 this would/should have been sorted by HMRC. Not used to making contact them and hadn't really in previous 40 years of working. Going to bit the bullet on this one and just get on with things.

I think the important thing is to ensure something similar doesn't happen from now on and that your tax is correct.

Do you feel that your tax codes are correct for each of your two incomes now?

VFM123

Thank you for your reply. I 'think' my tax codes are correct. I have 3 sources of income; Forces Pension, Works Pension and State Pension. I've received P2s from HMRC dated 10 June 2012 stating:

a. Against my Forces Pension:

Personal Allowance £10500
State Pension £ 6397
a tax free amount of £4103
therefore a tax code of 410P

b. Against my works pension:

No calculation, but a tax code of BR allocated

I think that looks correct.

HMRC will recoup the £712.40 during 2013 (I assume this means during the tax year 2012/13). Not certain how this is collected, a further reduction in my tax allowance/code?

Many thanks

jem16

VFM123 wrote: »

Thank you for your reply. I 'think' my tax codes are correct. I have 3 sources of income; Forces Pension, Works Pension and State Pension. I've received P2s from HMRC dated 10 June 2012 stating:

a. Against my Forces Pension:

Personal Allowance £10500
State Pension £ 6397
a tax free amount of £4103
therefore a tax code of 410P

b. Against my works pension:

No calculation, but a tax code of BR allocated

I think that looks correct.

Yes that appears to be correct providing you agree with the state pension figure and provided your total income is less than £25,400. If it's more than that then it's not correct.

I would suggest that at the end of each tax year you check your tax to see if it's correct.

HMRC will recoup the £712.40 during 2013 (I assume this means during the tax year 2012/13).

I'm more inclined to think they mean tax year 2013/14. If they were going to take it this tax year they would have to amend your tax code now.

Not certain how this is collected, a further reduction in my tax allowance/code?

Yes they would decrease your code by another £3562 so you would end up with a tax code of 54P.

VFM123

Hi Jem16

Thank you once again for your various helpful replies. My annual income for 2012/13 will be below the £25,400 threshold but likely to be marginally higher than that for 2013/14 (subject to any increase in the threshold).

You asked about my 2010/11 income. For my 2010/11 Tax Year, I've pulled out my P60s for both of my incomes: - Forces Pension and Main Employment.

For my Forces Pension, my income was £13,781.41 with tax paid of £2,756.20. My tax code was BR

For my main employment, my income was £36,322.30 with tax paid of £6,502.60. My tax code was 380L

I had no other income. I took early retirement on 31 March 2011.

Does the above equate to an underpayment of £712?

Thanks again

antonic

OK VFM, your tax liability is calculated as follows :

Pay £36322.30 Tax £6502.60
Forces Pension £13781.41 Tax £2756.20
Total £50103.70 Tax £9258.80

Tax Allowance (Under 65) £6475

Taxable Income £43628.70 Tax £9258.80

Tax due £37401.00 x 20% £7480.20
Tax due £6227.7 x 40% £ 2491.08

Total Tax Due £9971.28
Less Tax deducted £9258.80

Underpaid £712.48

Hope you understand this !

jem16

VFM123 wrote: »

Does the above equate to an underpayment of £712?

Yes it does.

Pay £36322.30 Tax £6502.60
Forces Pension £13781.41 Tax £2756.20
Total £50103.70 Tax £9258.80

Personal allowance for 2010/11 was £6475 so that leaves £43,628.71 taxable.

£37,400 at 20% = £7480
£6228.71 at 40% = £2491.48
Total tax due is £9971.48

You paid £9258.80 so difference is £712.68.

If you give us figures for 2011/12 we can check that for you too.