Coding Errors and HMRC's Resistance To ESC A19

The Telegraph has highlighted the ongoing attempts by HMRC to resist claims by taxpayers for application of the ESC A19 concession. The concession allows tax arrears to be written off if three conditions are met:

1 HMRC failed to make “proper and timely” use of information provided to it.

2 The taxpayer “could reasonably have believed their tax affairs were in order”.

3 No notification was sent to the taxpayer within 12 months of the end of the tax year in question.

Unsurprisingly, given the regular coding errors, many taxpayers (pensioners are particularly prone to erroneous coding notices if they have more than one pension source) find themselves in a position of owing or being owed tax.

As per a letter to the Telegraph:

"I read with great interest your account of the case of RD, South of England. My case covers unpaid tax to the tune of £10,457 for the tax years 2002-03 to 2007-08 as advised to me in an HMRC letter dated July 3, 2008. Even though this was received with shock and concern this sum was paid in full to HMRC because I was informed by them in reality that I had no option but to pay up. 

However, in October 2011 I became aware, through reading your column, of the A19 concession and wrote to HMRC seeking it to apply it to my case retrospectively. Eventually I was told that it would not apply. However, my case seems so similar to that described in your column recently it once more raised my concern about the way HMRC has dealt with mine. It had all the necessary information."

Only after the Telegraph intervened did HMRC back down, apply the concession and pay back the tax.

HMRC said:

“We apologise for the way that we have handled matters for Mr P. This is not the level of service we aim to provide. We are sorry for any worry and distress that he has experienced. We are sending a payment for £150 to him to apologise for our poor handling.” 

Elaine Clark, director of the accountants Cheap Accounting, is quoted by the Telegraph:

“Taxpayers who suffer errors are being forced to be more tenacious.

In our experience HMRC has toughened its stance. It’s almost as if officials don’t read the case file, they just send out a letter demanding payment even if the taxpayer would have legitimately qualified for ESC A19.”

In some cases, she said, taxpayers were left totally unaware of their rights. Others were frightened to take on the authorities.

Theoretically, RTI will eliminate these coding errors.

Time will tell!

Tax does have to be taxing.

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