HMRC, Failure to Carry Out Their Primary Function and Blame Game

boardsnow_1988

Afternoon.

I am reaching out to the forum as I don't really have anywhere else to turn on this matter, and it is of significant importance to my well-being and financial position.

 In November 2022, I discovered that HMRC had received over ten years of P11D information from my employer that was not input into their system (as in they had the information and did nothing with it), and therefore resulted in my tax code being wrong for the decade. This has resulted in me owing the HMRC over £16k for five years of the ten (tax owed limited to this timeframe). For context, this was only discovered due to the completion of a self-assessment tax form I submitted as I was in receipt of child income benefit.  

Upon having various discussions with the HMRC, I was directed towards a process called the ESC-A19. This is a process whereby I can ask for tax owed to be struck off because a failure of HMRC to act upon the information they had received. However, I can only - under parliamentary law - ask for two of those years to be struck off (equating to over £5k).  

In terms of where this has got to...the HMRC are hiding behind a 'reasonable belief' calculation which implies that I should know about tax codes/affairs because of my age, job, qualifications and salary. Although I should take their algorithm conclusion as a compliment, I can confirm I know nothing about tax. I have been a PAYE employee all my life and rightly assumed that submission of P11D information to their organisation would go into the machine and take care of me - it did not. The fact that I was the whistleblower on my tax situation is still yet to convince them that I didn't have a clue regarding this situation. 

As a result, I have paid off £13k of tax within 18 months; including one of the years that is in dispute. I have had to take out a second mortgage. I also moved home a month or two before this came to light, which I would not have done had I known about this issue (higher mortgage payments). I have been fighting the two qualifying years through the ESC-A19 with no luck and I am one step away from taking this to an ombudsman. 

 I have no idea how I can prove to the HMRC that I was unaware of the issue. It was my reasonable belief that the HMRC would take my employer's information (for which they have agreed in letters that they received it and did nothing with it - admission of guilt) and ensure that my tax code was right so an issue like this did not occur. I have been failed by HMRC and I am being failed by their complaints process.

 Is there anything I can do to help this situation? I am essentially fighting a goliath with no resources or knowledge of how to do it?

Hoenir

Did you not receive copies of the P11d forms from your employer? The discrepancies on your tax code would have been been immediately apparent. Likewise were the benefits something you could have notified the HMRC of yourself. 

mybestattempt

boardsnow_1988 said:

Afternoon.

I am reaching out to the forum as I don't really have anywhere else to turn on this matter, and it is of significant importance to my well-being and financial position.

 In November 2022, I discovered that HMRC had received over ten years of P11D information from my employer that was not input into their system (as in they had the information and did nothing with it), and therefore resulted in my tax code being wrong for the decade. This has resulted in me owing the HMRC over £16k for five years of the ten (tax owed limited to this timeframe). For context, this was only discovered due to the completion of a self-assessment tax form I submitted as I was in receipt of child income benefit.  

Upon having various discussions with the HMRC, I was directed towards a process called the ESC-A19. This is a process whereby I can ask for tax owed to be struck off because a failure of HMRC to act upon the information they had received. However, I can only - under parliamentary law - ask for two of those years to be struck off (equating to over £5k).  

In terms of where this has got to...the HMRC are hiding behind a 'reasonable belief' calculation which implies that I should know about tax codes/affairs because of my age, job, qualifications and salary. Although I should take their algorithm conclusion as a compliment, I can confirm I know nothing about tax. I have been a PAYE employee all my life and rightly assumed that submission of P11D information to their organisation would go into the machine and take care of me - it did not. The fact that I was the whistleblower on my tax situation is still yet to convince them that I didn't have a clue regarding this situation. 

As a result, I have paid off £13k of tax within 18 months; including one of the years that is in dispute. I have had to take out a second mortgage. I also moved home a month or two before this came to light, which I would not have done had I known about this issue (higher mortgage payments). I have been fighting the two qualifying years through the ESC-A19 with no luck and I am one step away from taking this to an ombudsman. 

 I have no idea how I can prove to the HMRC that I was unaware of the issue. It was my reasonable belief that the HMRC would take my employer's information (for which they have agreed in letters that they received it and did nothing with it - admission of guilt) and ensure that my tax code was right so an issue like this did not occur. I have been failed by HMRC and I am being failed by their complaints process.

 Is there anything I can do to help this situation? I am essentially fighting a goliath with no resources or knowledge of how to do it?

The HMRC guidance on ESC A19 is:

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye95005

As you say you're one step away from taking this to an ombudsman I take it you have already referred the dispute to the Adjudicator and they endorsed the position HMRC takes. 

If not, then referral to the Adjudicator would be the next course of action if you consider that ESC A19 has not been properly applied:


https://www.gov.uk/guidance/how-to-complain-to-the-adjudicators-office-about-hmrc-or-the-voa

tacpot12

Unfortuntely, the self-assessment tax regime in the UK means that you are responsible for paying the correct tax, and a lack of knowledge is no justification for not paying the correct tax. You are supposed to use a professional advisor if you aren't sure.

You haven't paid the tax and so had the benefit of the extra money for over 10 years. Under the circumstances, I think you need to to accept that gettign two years written off is quite good. However, I agree that you should be able to do better than this, but you need some expert who can help you argue the case.

I would engage your MP. I would also ask friends and family for recommendations of a personal tax advisor, and see if you can find a local tax advisor that will meet with you for free to review the situation and give you advice. Most important you need to find out how much they will charge you if they say they are able to help you. You will need to factor in the cost of their advice vs. what you might avoid paying. I would offer them 50% of anything they help you avoid having to pay, subject to it being their work that cracks the case - you don't want to have bought a dog and have to bark yourself. 

Phoenix72

There is very little for HMRC to input these days as most things are filed by the employer digitally. Did the P11ds filed by your employer have the correct NINO etc to be linked with your tax record?

The reasonable belief test is always contentious, it's not what you believed but if it was a 'reasonable belief' to hold. For example if it was company car benefit of £5000 then is it reasonable for someone to believe that there tax shouldn't have increased as a result of having a company car? One could say not, a view I agree with. Whether you like it or not you have some responsibilty here. Ignorance if the law and all that.

You can take it to the HMRC adjudicator but would say you have probably got away with 5/6 years worth of tax as I doubt HMRC will have assessed you the full 10 years?

Why do you think you shouldn't have to pay the tax that 99% of those in your situation had to?