Waiving underpaid tax

clanger32

Hi MSE folks, 
I have a really weird situation with HMRC that I'm hoping someone may be able to help advise me on.  Specifically and to cut to the chase, I have underpaid tax for Tax year ended Apr22 through no fault of my own and I'm wondering if it's possible to get HMRC to waive this - either through ESC A19 or other method (link to ESC A19 description- (I'm not allowed to post links yet - but search for "If HMRC did not act on information they were given - GOV.UK " to find background on ESC A19))

So, to the sordid story.  Up until Jan '20 I had been acting as an independent contractor.  At this point, the company I was working for at the time - and with the impending doom of IR35 looming large - made me an offer to go perm I couldn't refuse.   My accountant and tax advisor wound up my ltd company and filed final returns both company and personal, advising HMRC in the process I no longer needed to do self assessment returns.  HMRC agreed this.  
P45 was provided to new employer, PAYE started and all then ran really smoothly until Jan this year (Jan '22) when HMRC sent a self assessment demand to my employers office address - not a correspondence address they have ever had for me.  The letter, whilst addressed to me, used a new NINO and UTR.  Simultaneously HMRC sent a P6 coding notice to my employer to put me on emergency tax, referencing my CORRECT NINO.  

There is a lot more to this - which I can go into if it helps, but the basics are that - 9 months after this all started it's become apparent that HMRC have created a duplicate entry for me, and have managed to cross polinate the two - so my real NINO shows no RTI information at all on the HMRC side, but all my PAYE filings have gone against this etc.   BECAUSE of this duplicate entity, which HMRC still can't fix (they don't even understand themselves how this has come to be) they have failed to provide a correct tax code, which means I've underpaid tax for the year.   

From my perspective - I have complied with everything HMRC have asked of me, I have paid all my tax from source and I honestly believe that my affairs were in order.  Given that the issue is entirely of HMRCs making; given that there is no reasonable assessment of the situation that says I should be able to determine I'd been underpaying - can I / How do I get HMRC to waive the tax they have failed to collect as a result of their own incompetence?   I do have an active complaint case open, btw.

Many thanks in advance - happy to add any further context / colour needed

Dazed_and_C0nfused

Most people have the emergency tax code (1257L) and that doesn't always mean you would underpay tax.

Do you have part 1A of the P45?

Have you calculated the tax owed and do you understand exactly why this is owed?  Could you enlighten us on this aspect?

If you have paid all tax from source why do you owe more 🤔

Given this tax is for the latest complete tax year I can't see much chance of a claim succeeding under ESC A19.

sheramber

Do you payslips  from April 21  to Jan 22 show tax deducted?

clanger32

Thanks for the replies.  
Part of the challenge is that I don't quite know where to start with such a long story, without posting the whole thing (Which would take pages and pages!) - but without the whole story, it leaves unexplained gaps!

The transition between contract and perm is not the issue - the correct PAYE coding notice was issued for the point of transition from contract to FTE and then the correct tax code was issues into the 20/21 tax year also.   

HMRC (Now - after extensive arguing) agree that for the entire period of my permanent employment they have been receiving the correct FPS notifications to my "normal" NINO [well, perhaps more correctly stated as "they have been receiving FPS notifications correctly" - subtly different to "correct FPS").   The problem is that the self assessment people are getting all the RTI information to the temporary NINO.  As already stated, this really DOESN'T make any sense at all - but there isn't much point in applying logic, it would seem.

BECAUSE of the various parts of the mess HMRC have agreed they have made, they failed to issue the correct PAYE code for 22 - it's not entirely true, but for ease of discussion, I should not have had a 1257L tax code, I should have had a 0T code - it is this that means I've underpaid.  However, this is the code (1057L) my HR team were given and therefore what's been applied.  Therefore, I have been paying all my tax at source, based on an incorrect PAYE code, which was itself issued based on HMRC having erroneously created a second entity for me and confusing the hell out of everyone.  

Now, reading the blurb on ESC A19, I agree the use case doesn't entirely fit - but that really is the crux of my question, given that this isn't just a little error, but a monumental screw up, over two years, admitted to by HMRC as their problem, that features them failing to correct the error for a year (latest estimate for re-merging the records), that I could not *reasonably* have caught - I'm wondering if there's a means by which I can reasonably avoid a whacking great tax bill which I honestly don't think is my "fault"  

clanger32

oooh, sorry - and yes, all my payslips show tax deducted, further that tax is correct for the PAYE code HMRC have provided - just that the code they provided ISN'T correct, therefore I've paid exactly what HMRC have asked, but they've asked for the wrong amount, in effect

Dazed_and_C0nfused

HMRC (Now - after extensive arguing) agree that for the entire period of my permanent employment they have been receiving the correct FPS notifications to my "normal" NINO [well, perhaps more correctly stated as "they have been receiving FPS notifications correctly" - subtly different to "correct FPS"). The problem is that the self assessment people are getting all the RTI information to the temporary NINO. As already stated, this really DOESN'T make any sense at all - but there isn't much point in applying logic, it would seem.

Do you mean your employer has been filing two sets of RTI data for you 🤔


So what did you do when you received your first payslip with tax code 1057L on?  Ultimately it is your responsibility to ensure the correct tax code is being operated.

BECAUSE of the various parts of the mess HMRC have agreed they have made, they failed to issue the correct PAYE code for 22 - it's not entirely true, but for ease of discussion, I should not have had a 1257L tax code, I should have had a 0T code - it is this that means I've underpaid. However, this is the code (1057L) my HR team were given and therefore what's been applied. Therefore, I have been paying all my tax at source, based on an incorrect PAYE code, which was itself issued based on HMRC having erroneously created a second entity for me and confusing the hell out of everyone.  

Dazed_and_C0nfused

clanger32 said:

oooh, sorry - and yes, all my payslips show tax deducted, further that tax is correct for the PAYE code HMRC have provided - just that the code they provided ISN'T correct, therefore I've paid exactly what HMRC have asked, but they've asked for the wrong amount, in effect

So the long and short of it is you've effectively had an interest free loan from HMRC.  Some tax which would ideally have been paid in the period 6 April 2021 to 5 April 2022 is now going to have to be paid in January 2023?

Seems like a win for you over HMRC!