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| Her Majesty's Revenue & Customs (HMRC) office, Wellington Place, Belfast, Northern Ireland, October 2010 (Photo credit: Wikipedia by Ardfern) |
As you may know, HMRC is currently resisting all claims under Extra-Statutory Concession (ESC) A19,
which for the uninitiated is a concessional treatment for taxpayers,
usually unrepresented and who have not been required to submit tax
returns, who find themselves with tax liabilities where PAYE codes
have been issued incorrectly.
HMRC has issued a consultation document
which is here.
This is the response I am sending to
HMRC. It is based on my own experience with no cribbing from anyone
else.
Response begins:
5. Summary of Consultation Questions
Taxpayer responsibilities
5.1 Do you agree with the removal of
'reasonable belief' to be replaced with an objective test based
around 'taxpayer responsibilities'?
No. Most
taxpayers under PAYE are not tax specialists and have no need to
employ agents since their affairs should be simple. Many claims under
ESC A19 arise where individuals have two or more small occupational
pensions. With modern software they are entitled to believe HMRC will
get their tax liabilities right even if they have no concept of the
automated system. A majority of such taxpayers will believe
reasonably that their affairs are in order even if they are not.
HMRC responsibilities
5.2 Do you think that the introduction
of HMRC responsibilities makes it clearer in regard to what
information HMRC must act on? Has HMRC identified the correct
responsibilities and/or are there others that should be included?
It is
important that HMRC does take responsibility for taking action in
relation to all information received and this should include all
P14 and other end-of-year information. It is inexcusable that
HMRC even resists currently claims under ESC A19 where it is clear
they had relevant information as per Forms P14 received from
employers and pension providers, which should have been deal with
timeously.
'Exceptional Circumstances' test
5.3 Do you agree that the 'Exceptional
Circumstances' section is now redundant and can be removed from ESC
A19? If not, for what circumstances do you think it should be
retained?
This question
is slanted in itself. Low income taxpayers could endure serious
hardship if information not properly used by HMRC involves notice of
further liability less than 12 months after the relevant period or
which had built up over two years.
Capital gains tax
5.4 Can you identify any issues with
the removal of CGT from ESC A19? HMRC would be particularly
interested to hear examples of where a recent request has been made
in relation to CGT and ESC A19.
It is less
likely that a claim would be necessary in relation to capital gains
issues since most taxpayers should be aware of the tax.
Time limit for requesting HMRC looks
at ESC A19
5.5 Do you agree with introducing a
time limit for individuals to contact HMRC? Can you identify any
issues with HMRC adopting this approach?
The time limit
should be a fixed period of at least nine months after receiving Form
P800, in the interest of fairness. To change the dates in HMRC's
example:
“HMRC
notifies Mrs Smith of an underpayment for the tax year 2015-16 by
sending her a P800 Tax Calculation on 15th March 2018. Mrs
Smith considers it was HMRC’s failure to deal with information
which led to the underpaid tax. Mrs
Smith should contact HMRC: as soon as possible after receiving the
P800, or, upon receiving her Tax Code Notice for 2018-19, but in any
case, before 6 April 2018.”
This
would leave Mrs Smith three weeks to notify HMRC of her claim, which
would be unfair. Theoretically on HMRC's proposed change Mrs. Smith
might have no real time to notify at all. Surely nine months is a
fair and reasonable period to make a claim?
Other considerations
5.6 HMRC plans to issue supporting
guidance alongside the revised wording. What format would be most
appropriate for this? For example, online guidance, a Question and
Answer document or updates in the PAYE Online Manual.
5.7 Are there any terms within the
revised concession which you feel require further explanation or
expansion?
On-line
information should always be available, but a paper Question and
Answer Document should be available for all taxpayers should they
need it.
However HMRC
has not demonstrated that there is any need to amend the current
guidance on operation of ESC A19. Clearly the present Concession has
been reinterpreted in HMRC's favour in the last two years with even
very excellent and one would have thought irrefutable claims being
denied, requiring taxpayers to make formal complaints.
HMRC should
view the Concession not as a drain on Treasury revenue, but as it was
formerly; to bring justice to taxpayers who can ill-afford late and
unexpected tax demands when HMRC should have properly collected the
tax at the time the relevant income was received.
End
of response
I
am very unhappy both about the proposed revision of ESC A19 and agree
with Keith Gordon that there is no need for any change. If you have
not done so already, please hurry to sign Keith's petition against
the change.
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