Underpayment of PAYE - Extra Statutory Concession A19 (ESCA19)

pvh

Hello,

I received a hefty tax bill from HMRC close to £4k recently. It's for the 2014-15 tax year, approx. 18 months after tax year-end. I work for a sizeable employer so I was under the wrong assumption between them and HMRC that my tax codes would be calculated correctly. Ironically, HMRC is also charging me interest since the beginning of this year however only bothered to tell me about it now... very nice of them.

During the 2014-15 year my employer changed it's legal entity and my P60 showed two companies instead of one. No P45 was necessary though.

Anyway, my question is: Can I challenge the tax bill under the Extra Statutory Concession A19 (ESCA19) act and what are the chances of success? Do i need to get a tax advisor involved?

Any help will be much appreciated...

Dazed_and_confused

Sorry but you're not going to get any useful answers on here without supplying some useful information yourself.

A good start would what actually caused the tax underpayment?

What do you think the HMRC did wrong

Did you genuinely have no idea you were underpaying? £4000 is a pretty hefty amount to owe in PAYE tax.

The A19 rules aren't just about any error the HMRC have made, there is more to it than that.

pvh

I assume it is connected to the change of company name/entity that resulted in a wrong tax code. Tax free allowance with new calculations from hmrc was also less. I genuinely didn't know otherwise i would have done something about it sooner.

Enough info?

Darksparkle

When did the company change?

What tax code was used before and after the change? Do you know that it was HMRC that assigned the wrong tax code and not your employer?

Did you receive a coding notice at the time of the change?

When you say the P60 shows two companies, do you mean it shows income in both the previous and this employment sections?

Dazed_and_confused

Did your annual income go over £100,000 for the first time by any chance?

Pennywise

Have you checked that the £4k due is correct? That's the first thing to do. It could well be wrong if either your employer or HMRC have somehow duplicated your earnings in the first employment - I've seen it happen.

pvh

Thanks for the replies... I'm definitely still a novice at this.

I received the first tax code notice from HMRC for the 2014-15 tax year in Jan 2014 - 582T
Second notice in June - K396
Third notice in July - 599L

Company changed name in June 2014.

My P60 showed a previous employment and a current employment line and then the total of the two crept over the £100k mark (£113k in total) for the first time. P60 shows £36k in taxes paid (total for the two 'employments'). Final tax code on P60 was 599L.
As the employees transferred 'automatically' to the new entity no P45 was issued (not even sure if that's relevant).

What do you reckon are my options?

Pennywise

Looks like most of the underpayment is down to you earning over £100,000 because you start to lose your personal allowance, but HMRC can't know that until afterwards so can't amend your tax code. So on that point alone, neither HMRC nor your employer have done anything wrong.

You have unusual tax codes so there must be something else going on such as benefits in kind or earlier year underpayment - you'd have to look at the coding notices sent to you by HMRC to see whether they were actually right - but if not, you should have checked and raised it with HMRC at the time.

Your only hope of the ESC applying would be if you told HMRC your wages were going over £100k to give them time to amend your tax code, or if you told them that your coding notices were wrong and they didn't act on it. The ESC is all about HMRC not acting on info they had been given - it can't apply if they had not been told of changes in your tax affairs.

Darksparkle

I take it you didn't register for self assessment for that year as you earned over £100,000?

pvh

The 2014-15 was my second year of self assessment so I was registered. Previous year was borderline 100k.

Ah crap, it seems that I am hit with this tax bill. Didn't realise (own ignorance) that tax codes needs to be double and triple checked. Will do so from now on.

Darksparkle

pvh wrote: »

The 2014-15 was my second year of self assessment so I was registered. Previous year was borderline 100k.

Ah crap, it seems that I am hit with this tax bill. Didn't realise (own ignorance) that tax codes needs to be double and triple checked. Will do so from now on.

Didn't this show up when you done the return?