Ongoing appeal with HMRC - yet being charged interest and late payment penalty

Becs112

Hi 
Can anyone offer some quick advice?
My husband has an ongoing dispute with HMRC over the amount of tax he owes for the previous tax year.  He rang them in April 18 to give his current salary so they adjusted his tax free allowance accordingly.  He was then paid a bonus in December 18 which was more than he expected.  At that time his payroll informed HMRC through RTI of the bonus paid, but HMRC did not adjust his allowance accordingly and so he underpaid tax.
He then received a tax bill in November 19.  He has queried why they did not act upon the information given by his company in January to reclaim the tax through his monthly tax contributions, and was told that this is not what RTI is for??  Since November he has written to them with a formal complaint and appeal to say that they made the mistake and requested to pay the outstanding amount through PAYE.  However it has taken them months for HMRC to reply.  He received a letter today to say that his appeal was rejected and that he owed late penalty and interest on the outstanding amount.  They begin the letter by apologising for the delay in replying yet still want to charge interest?  Is this legal / fair?  
Any initial advice and where to go from here would be welcome.
Thanks

[Deleted User]

It may not be what you want to hear but I don’t believe that you have any further options.
HMRC is correct when stating that RTI is not designed to flag up every potential underpayment - how could it with millions of submissions every week/month? I am not sure that you can say that it was ‘their mistake’. While there are substantial benefits with RTI it was my understanding that a primary purpose was to make it more difficult for employers deviate from compliance. I imagine that it is the position of HMRC that your husband was aware of the underpayment from December 2018 until November 2019 and, as it is the responsibility of the taxpayer to ensure that their tax affairs are correct, there is no case to answer. There is an extra statutory concession A19 regarding late action by HMRC but I see no grounds for a successful claim. HMRC acted timeously

https://www.gov.uk/hmrc-did-not-act

Presumably a demand was issued and your husband chose not to pay in anticipation of a successful appeal. That was the mistake I am afraid. Had he paid first and then appealed, penalties and interest could have been avoided entirely.

csgohan4

it's fair and legal, you could have paid under protest and saved yourself interest and penalties. 

Becs112

Ah ok, it sounds like we will have to suck this one up and put it down to experience.  I thought that RTI reporting would adjust his tax at the time in order to avoid underpayments of tax.  Lesson learned.  Thanks.

Becs112

Although my husband was not aware that he was underpaying tax as it has always been automatically adjusted through payroll so was surprised when he was hit with a bill despite his payroll having informed HMRC of his increase in salary.