 |
| HM Revenue and Customs seen from Parliament Square (Whitehall, London, England). Photographed by Adrian Pingstone in June 2005 and placed in the public domain. (Photo credit: Wikipedia) |
The Concession
For those not familiar with Extra
Statutory Concession A19, here is HMRC's own commentary on the subject. To quote the beginning:
“If you think that HM Revenue & Customs (HMRC) should have already collected the tax due in your Tax Calculation (P800) because the information had already been provided to it and HMRC have failed or delayed to use this information, then in some limited circumstances HMRC may agree not to collect it.
An 'Extra Statutory Concession' (ESC A19) allows HMRC to do this and it only applies to individual taxpayers who owe Income Tax and Capital Gains Tax. It does not apply in any other circumstances where amounts owing to HMRC are in dispute.
The circumstances are that HMRC should have used the information provided within 12 months after the end of the tax year in which it is received to notify the taxpayer of any arrears.”
As it says on the tin, the relief is
concessional and therefore discretionary. So what am I complaining
about?
Recent history
Back in the summer of 2010 HMRC had
improved their software for finding overpayments and underpayments of
tax mainly in respect of the majority of people taxed under PAYE who
are not required to submit tax returns under Self Assessment. These
differences covered a number of years generally from 2006-07 onwards
though I believe there were an odd few from a year or so earlier.
If HMRC were not fairly quick in
recovering what tax they thought they were owed, they would have been
statute-barred from collecting it. So they set about sending out
calculations of tax generally outstanding for the previous three or
four years.
Many of the people caught out were
pensioners with usually more than one occupational pension, though
the pensions themselves are often quite modest. Obviously there was a
furore and a campaign in the newspapers, many of which drew attention
to ESC A19. Individuals with unexpected tax demands of often £5,000
- £6,000 made claims under ESC A19 and many, possibly most of the
claims by pensioners in this situation were allowed. Great, and it
seems only fair that people of modest income with almost none from
savings (with such low interest rates) should not be landed with such
an unexpected tax burden.
However, not all the underpayments of
tax (yes, and some overpayments) were found in the first wave. HMRC
have continued to run their program, many more differences have been
found, and calculations sent to unsuspecting taxpayers including many
more pensioners.
A sad tale
Consider the case of one lady, who
following the death of her husband a few years back, actually visited
an HMRC office back in the days when one could, and went through her
income sources requesting that HMRC made sure her tax affairs would
be in order. Four-and-a-half years later (at the end of 2011) she
received a demand from HMRC for more than £6,000. Apparently she had
been given allowances against more than one occupational pension.
She made a claim under ESC A19, which
has been refused and her appeal turned down. Yet all pension
providers must have advised HMRC by 19th May annually of the amounts
paid to their pensioners in the previous tax year. Surely “HMRC...
failed to use information received about a source of income, within
12 months after the end of the tax year in which the information is
received” especially when you consider the lady visited HMRC's
office back in 2007.
Yet HMRC says the lady fails the
“reasonable belief” test. Presumably because the HMRC officer she saw in 2007 did nothing
following her visit and did not type a note into the computer system,
HMRC is prepared to call the lady a liar.
Patent unfairness
HMRC seems to be resisting every ESC
A19 claim now. I suppose there has been an internal memo that to much
tax was being lost or leaked because of the claims made.
Yes, we are dealing with a concession.
Yet the current attitude of HMRC is patently unfair as I have no
doubt that if the initial claim had been made in December 2010 rather
than December 2011 it would have been allowed and the tax written
off. It is hardly the lady's fault that HMRC took an extra year to
re-calculate her tax liabilities and certainly not her fault that
HMRC failed to act following her visiting their office in 2007 at her
own initiative. Except, as I said, that they seem to be calling her a
liar.
In my view it is patently unfair that
almost identical claims made a year apart have been treated entirely
differently. I have no doubt that back in 2010 some more extreme
claims were allowed by mistake.
I do not think it unreasonable to
expect that HMRC should be even-handed in dealing with similar cases
where taxpayers really were entitled to believe that HMRC had all
relevant information. Internal directives (yes, there must have been
one) should not mean that one British taxpayer should be treated
differently from another.
What is your experience?
