ESC a19 turned down

Tbolt

Hi, Sorry if this is a long story but I could not find the answer from a search.

I recently received 3 p800 notices for 2008-09, 2009-10 and 2010-11.

For the first two years there was under payments of £1k and in the final year an over payment of tax leaving over £760 to be paid back through next years tax coding.

I pay my tax through PAYE on one employment (since 1996) and a pension (since 1993).

In past years the tax office has quickly informed me of problems so I looked on this site and learned of the ESC a19.

I called HMRC ESC office and was told the problem was the result of problems with HMRC computers in the past. I had wrongly added up each p800 thinking I owed £3600 so when explained I only owed the final total I ended my call.

Afterwards I reflected on the call as my income has hardly changed in recent years (public sector pay freeze) I may be over paying again this year. I decided to call HMRC again about ESC a19 for 2008 to 2010.

I spoke to a lady who was not as helpful this time and asked why I thought there was a problem and who was at fault?

I stated that I had made the previous call and told of the HMRC computer problem. She did not seem to accept this and asked if I thought that myself; my employer or pension were at fault. I explained that I paid PAYE and payment was made on tax coding provided by HMRC. She asked if I had any third party information but I did not as I had no other income apart from an ISA. I was given a new Tax coding for next year and told to expect a decision in two weeks.

Within a week I have received a letter rejecting my ESC a19 claim because they have no records of information from me or any third party (end of year info from employer does not count). I have been invited to respond if I do not agree with their decision.

Before I respond, was I correct in asking for ESC a19 because of the length of time elapsed or am I excluded because I did not change jobs or claim any benefits in that period?

Does the following apply?

• HMRC allowed tax arrears to build up over two whole tax years in succession - so at least two tax year underpayments are due

Thanks for any advice.
Gerry

jimmo

Tbolt wrote: »

Does the following apply?

• HMRC allowed tax arrears to build up over two whole tax years in succession - so at least two tax year underpayments are due

I presume you got that from here.

http://www.hmrc.gov.uk/esc/esc.htm

What they are trying to say is that if they have failed to act on “information received” for a number of years not only will they write off the underpayments for earlier years but they will also write off the underpayment for last year and this year.

So, the test is still the same. Did HMRC fail to act on “information received”?

The link above also gives a definition of “information received” and, on the face of it, HMRC have not failed to act on “information received”.

Also, its not exactly a secret that HMRC has had problems with its computer systems and situations like yours are all too frequent and seem to be coming out of the woodwork incessantly.

First of all do you understand why the underpayments have arisen?

Come to that, do you understand why you overpaid tax in 2010/11?

What is the situation for 2011/12?

Why do you think you may be overpaying this year (2012/13)?

Are you prepared to publish the figures?

As a generalisation, taking a pension and continuing to work tends to cause tax problems for a year or 2 until things settle down but in your case that was years ago so shouldn’t be relevant here.

If we can establish what went wrong that will be a start.

back_against_the_wall

Actually, I think failure to act on end of year info from an employer does count. This is a quote from the HMRC web site: "This information can come from a variety of sources - you, your agent, your employer or the Department for Work and Pensions (DWP)." You will note mention in this of "your employer", which would certainly include the employer's EOY return. I think you have a good case in pursuing your claim under ESC A19 if HMRC have only just sent you calculations going back to 2008-2009, which is certainly later than their criteria of notifying arrears not later than one year after the end of the year in which they arose. You have to be persistent because there has been so much publicity attaching to ESC A19 in providing a way out of paying arrears of tax that I suspect HMRC staff are totally fed up with receiving enquiries and tend to reject claims rather hoping for the best and that the claimant will accept their decision and give up. However, you have every right to question their decision, and even get your MP involved, if you think they have not adequately considered your case. Regards and best wishes.

dori2o

back_against_the_wall wrote: »

Actually, I think failure to act on end of year info from an employer does count. This is a quote from the HMRC web site: "This information can come from a variety of sources - you, your agent, your employer or the Department for Work and Pensions (DWP)." You will note mention in this of "your employer", which would certainly include the employer's EOY return. I think you have a good case in pursuing your claim under ESC A19 if HMRC have only just sent you calculations going back to 2008-2009, which is certainly later than their criteria of notifying arrears not later than one year after the end of the year in which they arose. You have to be persistent because there has been so much publicity attaching to ESC A19 in providing a way out of paying arrears of tax that I suspect HMRC staff are totally fed up with receiving enquiries and tend to reject claims rather hoping for the best and that the claimant will accept their decision and give up. However, you have every right to question their decision, and even get your MP involved, if you think they have not adequately considered your case. Regards and best wishes.

End of year submissions do not count as 'information' for ESC A19 purposes.

Why?

Because this information is old data. It provides information of what has happened, not what will happen. There is no way for HMRC to know whether this information is still current or not.

System

OP the time taken to issue the calculations might be relevant but it depends on the underlying cause of the arrears. The two whole years is only relevant if the latest (underpaid) year was dealt with within 12 months of the end of that year. For example if the 2009-10 calculation was issued before 5 April 2011. In normal circumstances A19 wouldn't apply for 2009-10, but it might if you underpaid 2008-09 as well. This 'time limit' test is only one small part of A19

To briefly sum up HMRC has four years from the end of a tax year to review your PAYE deductions and notify you of any arrears. Unless the underpayment was caused by HMRC's failure to act on information. That is to say when you started underpaying tax they held info that could have prevented it, but failed to act - if that's what happened the time limits of ESC A19 come into play.

As a first step you need to get to the root cause if the underpayment. It's only at that stage you can ask did HMRC know anything at the time that could have prevented it. If your PAYE deductions had been fine up to that point, you need to think about what changed in your personal circumstances?

System

Tbolt wrote: »

.I pay my tax through PAYE on one employment (since 1996) and a pension (since 1993).

If neither has changed since they started and you have received coding notices for both in the past, indicating HMRC were aware of the existance of both of them, then you need to query what went wrong.

Keith_Gordon

Unfortunately, HMRC have started to take a very hostile attitude to claims made under ESC A19 in the hope that would-be claimants will eventually go away.

This is a matter which is being actively pursued by the tax professional bodies and I, for example, have accused HMRC of being dishonest in this area in articles in the professional press.

It is impossible to justify HMRC's stance in this area. However, they are going to continue to refuse to adhere to ESC A19 in many cases until they are told otherwise by Courts or the independent adjudicator. Taxpayers should therefore be persistent. It might be useful to make contact with firms of tax advisers or the charitable sector so that group power enables a proper challenge to be made in the Courts.

Keith Gordon, Barrister

back_against_the_wall

dori2o wrote: »

End of year submissions do not count as 'information' for ESC A19 purposes.

Why?

Because this information is old data. It provides information of what has happened, not what will happen. There is no way for HMRC to know whether this information is still current or not.

With respect I am not sure this is correct. The test for remitting tax under ESC A19, also known as "official error", is that HMRC have not acted in a timely manner from information received from whatever source, either from the taxpayer, their employer, a benefits agency, whatever. The information provided by an employer in an EOY return, whether of pay and tax, or of benefits on form P11D, would certainly count as "information received". What difference does it make that this might be "old data"? When I worked for HMRC (then the Inland Revenue) many years ago we used the information from EOY and P11D returns as a matter of course to update the coding for the current year. This was standard procedure because it represented the latest information available to set a tax code to get the tax deductions right for the current year. It was up to the taxpayer to appeal against the notice of coding if some figure was out of date or no longer applicable. The other test for ESC A19 is that there has been a failure to act on information provided resulting in underpayments for more than just one year. Several years have to be involved to get HMRC to even consider giving up collection. Also, as previously stated, you have to be persistent as HMRC are likely to reject claims out of hand these days just because they are HMRC and can expect most taxpayers to give up without much of a challenge.

back_against_the_wall

Keith_Gordon wrote: »

Unfortunately, HMRC have started to take a very hostile attitude to claims made under ESC A19 in the hope that would-be claimants will eventually go away.

This is a matter which is being actively pursued by the tax professional bodies and I, for example, have accused HMRC of being dishonest in this area in articles in the professional press.

It is impossible to justify HMRC's stance in this area. However, they are going to continue to refuse to adhere to ESC A19 in many cases until they are told otherwise by Courts or the independent adjudicator. Taxpayers should therefore be persistent. It might be useful to make contact with firms of tax advisers or the charitable sector so that group power enables a proper challenge to be made in the Courts.

Keith Gordon, Barrister

Don't think the "Courts" or the "independent adjudicator" have any authority to rule on how HMRC operate ESC A19. It is an "extra statutory concession" after all against which there is no statutory right of appeal and is all down to "kindness" on the part of HMRC, as my old Inspector used to tell me more years ago than I care to remember when I presented him with another batch of cases to consider.

System

http://www.hmrc.gov.uk/leaflets/c12.htm

There's some useful info here about the role of the Adjudicators Office - leaflet AO1. As I understand it they cannot re-write HMRC's guidance or rule on their fairness (or otherwise).

They look at decisions on a case by case basis. They can recommend HMRC change a decision in an individual case if it's not consistent with legislation (where appropriate) or HMRC's published guidance.

The 1st Tier Tribunal (as opposed to the Adjudicator) has no jurisdiction over A19. I believe this was confirmed by a failed case a few months back.

Edit - found it

http://clients.squareeye.net/uploads/pump/documents/prince23.2.12.pdf

Keith_Gordon

At the moment, one cannot complain to the First-tier Tribunal.
However, the reason for that is that challenges should be made by "judicial review" to the High Court. This is going to be prohibitively expensive for most taxpayers and the Adjudicator is more likely to be the easiest way forward.
However, if enough taxpayers get together, a judicial review would be a sensible option to consider.

Keith Gordon, Barrister