Claiming ESC A19

SparkyG

Has anyone had success in claiming this concession from HMRC?

My husband has recently been given notice that he has underpaid £2800 income tax for years 2010-11 and 2011-12.

In October 2010 he retired from a job with a County Council to receive his County Council pension. He immediately started a new full time County Council job (same employer) so had 2 incomes.

He was deducted PAYE on both incomes, so trusted his employer and pension administrator (same County Council) to give the correct information. It now appears that HMRC was treating him as 2 separate people, despite having the same National Insurance Number, and have not added the 2 incomes together. This means that although he was liable for higher rate tax on about £6000 of his total income, this was not correctly deducted by HMRC.

He is claiming ESC A19 as he feels he is not to blame. His employer gave the correct information, which HMRC failed to make proper use of.

Any thoughts?

jem16

SparkyG wrote: »

In October 2010 he retired from a job with a County Council to receive his County Council pension.

What tax code was used for his pension? Did he hand/send his P45 to the pension provider or did he complete a P46?

He immediately started a new full time County Council job (same employer) so had 2 incomes.

Again - what tax code was used. Was the P45 from his old job used or did he complete a P46?

He was deducted PAYE on both incomes, so trusted his employer and pension administrator (same County Council) to give the correct information.

What information was given to HMRC? Did you husband tell HMRC that he was now receiving a pension as well as still working but with a new job?

It now appears that HMRC was treating him as 2 separate people, despite having the same National Insurance Number, and have not added the 2 incomes together. This means that although he was liable for higher rate tax on about £6000 of his total income, this was not correctly deducted by HMRC.

This is fairly normal for those people with 2 incomes. HMRC have no way of knowing what income is being earned during the tax year unless you tell them. What your husband should have done was inform HMRC of the 2 incomes and they would have asked for the expected income from both and any necessary adjustments could have been made.

Without this, HMRC would not know anything about your husband's income until the employers made their end of year returns.

He is claiming ESC A19 as he feels he is not to blame. His employer gave the correct information, which HMRC failed to make proper use of.

Any thoughts?

What information do you feel HMRC was given that they did not act on?

For ESC A19 to apply, the pension provider plus new employer would have needed to have supplied a P45 and/or P46 during tax year 2010/11.

Either that or your husband would have needed to inform HMRC.

Did this happen?

System

OP, Jem16 has set out pretty much all of the questions you/your husband need to consider.

Unlike with employers, the default tax code for a new pension gives a standard tax-free allowance. Employers on the other hand have to deduct basic rate tax unless:

The employee gives them a P45 showing a different code.
Or
They complete a P46 saying they do not have another job or pension. Well, strictly speaking the employer doesn't need an actual P46 form anymore, they can collect the information in whatever format best suits their needs.

So the first thing to establish is how did the employer give a tax-free allowance when he started the 'new' job. Bearing in mind he was already getting his tax-free allowance from his pension provider

SparkyG

Thank both for your replies. Have quizzed husband a bit more in view of the information you have given, and he has now found P45. Parts 2 and 3 were not sent to new employer as he assumed it was the same employer. So now looks like his mistake, which I'm sure HMRC will point out!

jem16

SparkyG wrote: »

So now looks like his mistake, which I'm sure HMRC will point out!

if no P46 was completed for either the pension provider or his new job, then yes HMRC are not to blame and tax is due to be paid.

Perhaps more important now is to make sure his tax codes are correct for this tax year. Do you know if they are?

SparkyG

They are correct in as much as they are set to claim the underpaid tax, which he was disputing. HMRC say they will collect it this year and next.

System

jem16 wrote: »

if no P46 was completed for either the pension provider or his new job, then yes HMRC are not to blame and tax is due to be paid.

Perhaps more important now is to make sure his tax codes are correct for this tax year. Do you know if they are?

Jem16, they wouldn't complete a P46 for the pension provider. Unlike the normal P46 the P46(Pen) didn't have anything like the Statement A - C section or anything to sign. Pension providers complete the form themselves.

OP another thing you can do is ask HMRC to look into the possibility of employer error. If your husband still has his P45 how did his employer use a code giving a tax free allowance. without them having the P45 I can only think of two reasons.

1 he completed a P46 saying he didn't have another job or pension.

2 they might have incorrectly used the code without the authority to do so.

jem16

ceiberman wrote: »

Jem16, they wouldn't complete a P46 for the pension provider. Unlike the normal P46 the P46(Pen) didn't have anything like the Statement A - C section or anything to sign. Pension providers complete the form themselves.

Fair point regarding who completes the form.

However the point of completing the P46(Pen) is to alert HMRC that a pension has been started. That coupled with a P46/P45 from the new job would have been the information that HMRC would have needed to be aware that the OP had 2 incomes and that a review of the tax codes may be necessary.

OP another thing you can do is ask HMRC to look into the possibility of employer error. If your husband still has his P45 how did his employer use a code giving a tax free allowance. without them having the P45 I can only think of two reasons.

1 he completed a P46 saying he didn't have another job or pension.

2 they might have incorrectly used the code without the authority to do so.

As yet the OP has not told us what tax codes were given to the pension and the new job. It may be nothing to do with 2 tax-free allowances and both may have used the correct code.

In fact the OP mentions that the underpayment arose due to some income not being taxed at higher rate when it should have been. It's perfectly possible for one income to have been given the tax-free allowance and one income to be given a BR code and still give rise to an underpayment because the 2 incomes together crossed into the higher rate tax threshold.

Perhaps the OP can clarify what the 2 tax codes were?

SparkyG

ceiberman wrote: »

OP another thing you can do is ask HMRC to look into the possibility of employer error. If your husband still has his P45 how did his employer use a code giving a tax free allowance. without them having the P45 I can only think of two reasons.

1 he completed a P46 saying he didn't have another job or pension.

2 they might have incorrectly used the code without the authority to do so.

Thank you. He definitely didn't complete a P46, so it's possible reason 2 may apply.

jem16

SparkyG wrote: »

Thank you. He definitely didn't complete a P46, so it's possible reason 2 may apply.

Not necessarily - read my last post.

Can you give us the tax codes for his work and pension?

System

. Oops misread your post jem.