Unexpected tax demand from 2009-10
Discussion
I have, last week, recieved out of the blue a self assesment tax form. I have never had one before so I called HMRC to query it.
I was told that I owed ~£2000 in tax from the period in the first half of that tax year as i had been given an incorrect tax code.
I have been PAYE all my life (not self employed, no second job, no shares other investments or income streams during this period) so went through my records. At the end of July 2009 I changed companies, I have the p45 from the previous company and the p60 from the new company. The figures on them all tie up with what HMRC have, confirmed on the phone with HMRC.
Yet they say that the tax code they allocated me was incorrect for that year.
Questions for any experts:
I was told that I owed ~£2000 in tax from the period in the first half of that tax year as i had been given an incorrect tax code.
I have been PAYE all my life (not self employed, no second job, no shares other investments or income streams during this period) so went through my records. At the end of July 2009 I changed companies, I have the p45 from the previous company and the p60 from the new company. The figures on them all tie up with what HMRC have, confirmed on the phone with HMRC.
Yet they say that the tax code they allocated me was incorrect for that year.
Questions for any experts:
- Have I done anything wrong here?
- After a bit of googling I found many references to HMRC not pursuing these payements if it could be shown that they didn't follow their own guidlines, and or they didn't notify within 12 months - is this an option worth pursuing? Most of these seem to relate to mistakes made by HMRC during 08-09 and 09-10.
- Who should I speak to about this to find out what is and isn't possible?
- What would be suggested course of action, ideally to contest what I see is a situation absolutly not of my own making?
- It says that complaints should be made through suitable channels, yet I cannot find what a "suitable channel" is in this case - any suggestions?
Get in touch with an accountant.
The defence against such demands is Extra Statutory Concession A19. However, it is very hard to get ESC A19 to stick.
HMRC always tells PAYE taxpayers that they should check their PAYE tax codes for accuracy. If the taxpayers fails to do this, then he/she has little defence when HMRC come looking for any underpaid tax.
The first thing I would do would be to carry out a complete review of your tax situation for the years 2009/10 right up to 2012/13 to see whether matters have been right or wrong for those years and to ascertain whether the assertion that HMRC are making is correct.
The defence against such demands is Extra Statutory Concession A19. However, it is very hard to get ESC A19 to stick.
HMRC always tells PAYE taxpayers that they should check their PAYE tax codes for accuracy. If the taxpayers fails to do this, then he/she has little defence when HMRC come looking for any underpaid tax.
The first thing I would do would be to carry out a complete review of your tax situation for the years 2009/10 right up to 2012/13 to see whether matters have been right or wrong for those years and to ascertain whether the assertion that HMRC are making is correct.
As a first point,I would be looking at 2007/08 onwards - HMRC may have coded out an underpayment to 2009/10 without you realising it.
If you have all P45's and P60's, this shouldn't be too timely or costly.
ESC A19 is actually no longer available, though its terms have been put on the statute book via the recent Finance Act - based on the very basic facts, you may be able to go down this route should the liability actually exist.
David
If you have all P45's and P60's, this shouldn't be too timely or costly.
ESC A19 is actually no longer available, though its terms have been put on the statute book via the recent Finance Act - based on the very basic facts, you may be able to go down this route should the liability actually exist.
David
HMRC Pulls ESC A19 Back from the Brink
(An article published on AccountingWeb on 1 May)
HMRC responded to lobbying from the profession and this week announced it was dropping plans to revise the extra statutory concession (ESC) that applies when the department fails to act on information provided by the taxpayers.
Under ESC A19, HMRC can opt not to collect tax due if it did not deal properly with information submitted by a taxpayers and so contributed to the shortfall. As part of a wider review of ESCs, it proposed last year to revoke ESC A19 and to put it on a statutory basis, with different criteria.
Proposals were put out for consultation in July 2012 that would have ended concessions for those who had a “reasonable belief” their tax affairs were in order, and where exceptional circumstances cropped up within the tax year. Instead, it proposed that taxpayers should be responsible for getting things right - even if they authorise someone to act on their behalf.
While HMRC presented the amendments as a way to make ESC A19 more “user friendly” and objective, the reaction from accountants was irate. Keith Gordon launched an online Save ESC A19 petition that attracted more than 970 signatures and urged accountants to lobby against the change. His call was supported by numerous AccountingWEB members, and contrary to sceptics’ claims, appears to have had an effect.
Also an article in "Taxation" 11 April 2013
http://www.taxation.co.uk/taxation/Articles/2013/0...
(An article published on AccountingWeb on 1 May)
HMRC responded to lobbying from the profession and this week announced it was dropping plans to revise the extra statutory concession (ESC) that applies when the department fails to act on information provided by the taxpayers.
Under ESC A19, HMRC can opt not to collect tax due if it did not deal properly with information submitted by a taxpayers and so contributed to the shortfall. As part of a wider review of ESCs, it proposed last year to revoke ESC A19 and to put it on a statutory basis, with different criteria.
Proposals were put out for consultation in July 2012 that would have ended concessions for those who had a “reasonable belief” their tax affairs were in order, and where exceptional circumstances cropped up within the tax year. Instead, it proposed that taxpayers should be responsible for getting things right - even if they authorise someone to act on their behalf.
While HMRC presented the amendments as a way to make ESC A19 more “user friendly” and objective, the reaction from accountants was irate. Keith Gordon launched an online Save ESC A19 petition that attracted more than 970 signatures and urged accountants to lobby against the change. His call was supported by numerous AccountingWEB members, and contrary to sceptics’ claims, appears to have had an effect.
Also an article in "Taxation" 11 April 2013
http://www.taxation.co.uk/taxation/Articles/2013/0...
Edited by Eric Mc on Wednesday 29th May 14:57
Thanks for the help so far.
To answer the question about leaving previous employment, it wasn't redundancy nor did was there any compromise agreement; just a simple hand notice in leave and start another job.
What is the route for appeal? I'll investigate the suggestions put forward, but not being self employed or ever having anything to do with tax per se its new territory for me, but any heads up on who and how to go about it would be appreciated.
Thanks for the suggestions so far.
Edited to add: I've found this http://www.taxadvicenetwork.co.uk/content.asp?Page...
Although written on 2010 does it still hold true?
To answer the question about leaving previous employment, it wasn't redundancy nor did was there any compromise agreement; just a simple hand notice in leave and start another job.
What is the route for appeal? I'll investigate the suggestions put forward, but not being self employed or ever having anything to do with tax per se its new territory for me, but any heads up on who and how to go about it would be appreciated.
Thanks for the suggestions so far.
Edited to add: I've found this http://www.taxadvicenetwork.co.uk/content.asp?Page...
Although written on 2010 does it still hold true?
Edited by nc107 on Wednesday 29th May 15:46
Eric Mc said:
To lodge an appeal, you would need to have grounds for an appeal.
What would you think are those grounds?
("I don't like paying tax" does not count as grounds for an appeal).
As a PAYE employee it is not unreasonable to expect that given that more than 12 months have passed since the liability that HMRC got the previous tax coding right and you as a PAYE emplyee should not have to worry that those employed to get your tax right have got it right. What would you think are those grounds?
("I don't like paying tax" does not count as grounds for an appeal).
If you assume that every layman should fully understand Tax as provided by the professionals and pick them up for every mistake they make then it is a lazy and mistaken positon to take. If however the layman was to be fully responsible for their own PAYE then everybody should be under use self assement and use accountants not PAYE. The outfall of that is the tax revenue system would grind to a halt faily quickly and so would governments income.
Eric, fair point, but I feel that it is not my doing that there is (may have been) a mistake. My information has always been taxed at source and every year they (HMRC) review it and allocate me a tax code. If they allocate me an incorrect tax code even when they have the correct information that is not my fault. Now, if they recognise that quickly and put it right that is one thing, but to come along some 4 years later seems very unfair, indeed unreasonable.
I am happy to pursue this if possible, I am not in a position to just rustle up £2000, nor am I content to just take it up the chuffer.
It's not a case of not liking paying tax, I've been quite content to pay tax all my life. But to have a sudden demand 4 years after the event for a mistake not of my doing seems unreasonable.
I am happy to pursue this if possible, I am not in a position to just rustle up £2000, nor am I content to just take it up the chuffer.
It's not a case of not liking paying tax, I've been quite content to pay tax all my life. But to have a sudden demand 4 years after the event for a mistake not of my doing seems unreasonable.
Edited by nc107 on Wednesday 29th May 15:58
First of all - have they calculated the underpaid tax correctly?
Secondly - if they haven't, have they calculated too much or too little?
Thirdly, can you tell them what the correct tax liability should be?
Fourthly. If correct, can you claim that they had all the correct information at their disposal to get the tax coding correct?
Fifthly, if they DID have all the correct information but they STILL got it wrong THEN you may have a case against them.
At any point in the intervening years, did you ever check your PAYE Coding Notices to see if they made sense?
If you did, did you ever contact HMRC to query their codings and did you ever ask for the coding to be corrected.
Did you ever put these requests in writing and keep a record of such requests?
Secondly - if they haven't, have they calculated too much or too little?
Thirdly, can you tell them what the correct tax liability should be?
Fourthly. If correct, can you claim that they had all the correct information at their disposal to get the tax coding correct?
Fifthly, if they DID have all the correct information but they STILL got it wrong THEN you may have a case against them.
At any point in the intervening years, did you ever check your PAYE Coding Notices to see if they made sense?
If you did, did you ever contact HMRC to query their codings and did you ever ask for the coding to be corrected.
Did you ever put these requests in writing and keep a record of such requests?
HarryW said:
As a PAYE employee it is not unreasonable to expect that given that more than 12 months have passed since the liability that HMRC got the previous tax coding right and you as a PAYE emplyee should not have to worry that those employed to get your tax right have got it right.
If you assume that every layman should fully understand Tax as provided by the professionals and pick them up for every mistake they make then it is a lazy and mistaken positon to take. If however the layman was to be fully responsible for their own PAYE then everybody should be under use self assement and use accountants not PAYE. The outfall of that is the tax revenue system would grind to a halt faily quickly and so would governments income.
So wrong on many counts.If you assume that every layman should fully understand Tax as provided by the professionals and pick them up for every mistake they make then it is a lazy and mistaken positon to take. If however the layman was to be fully responsible for their own PAYE then everybody should be under use self assement and use accountants not PAYE. The outfall of that is the tax revenue system would grind to a halt faily quickly and so would governments income.
The tax legislation makes it clear that the "layman" is 100% fully responsible for ensuring they pay the correct tax on their income.
Just because they are usually taxed under the PAYE system does not release them from that obligation.
HMRC will pursue underpaid tax no matter what collection methodology is in place (PAYE or Self Assessment).
Eric I realise you are a respected accountant but you can come across as a HMRC drone sometimes. Since when are you 100% responsible, it is a three way thing, payroll, HMRC and you, of the three you as the layman are the least qualified. As much as the HMRC drones may consider they don't have any responsibility they do. That's why they are paid as a Government body they also have published guidelines and code of conduct.
So starting again before you commit someone into writing a cheque without a fight.
I work on a simple premis, if you don't ask you never get.
It seems to me that as you are PAYE and you have the requisit P45 @ 60's the HMRC does so too, we'll call it information held. As the claim against you is for 09/10 the tax man has 12 months after the end of the tax year to get it right. Being extra generous We'll assume that to be April 12 not 11. Therefore the claim against you falls under ESC A19, so I personally would ring thenumber and start making a claim that they right it off as their error.
See. http://www.hmrc.gov.uk/esc/esc.htm
So starting again before you commit someone into writing a cheque without a fight.
I work on a simple premis, if you don't ask you never get.
It seems to me that as you are PAYE and you have the requisit P45 @ 60's the HMRC does so too, we'll call it information held. As the claim against you is for 09/10 the tax man has 12 months after the end of the tax year to get it right. Being extra generous We'll assume that to be April 12 not 11. Therefore the claim against you falls under ESC A19, so I personally would ring thenumber and start making a claim that they right it off as their error.
See. http://www.hmrc.gov.uk/esc/esc.htm
HarryW said:
Eric I realise you are a respected accountant but you can come across as a HMRC drone sometimes. Since when are you 100% responsible, it is a three way thing, payroll, HMRC and you, of the three you as the layman are the least qualified. As much as the HMRC drones may consider they don't have any responsibility they do. That's why they are paid as a Government body they also have published guidelines and code of conduct.
So starting again before you commit someone into writing a cheque without a fight.
I work on a simple premis, if you don't ask you never get.
It seems to me that as you are PAYE and you have the requisit P45 @ 60's the HMRC does so too, we'll call it information held. As the claim against you is for 09/10 the tax man has 12 months after the end of the tax year to get it right. Being extra generous We'll assume that to be April 12 not 11. Therefore the claim against you falls under ESC A19, so I personally would ring thenumber and start making a claim that they right it off as their error.
See. http://www.hmrc.gov.uk/esc/esc.htm
I agree (based on the facts as presented)So starting again before you commit someone into writing a cheque without a fight.
I work on a simple premis, if you don't ask you never get.
It seems to me that as you are PAYE and you have the requisit P45 @ 60's the HMRC does so too, we'll call it information held. As the claim against you is for 09/10 the tax man has 12 months after the end of the tax year to get it right. Being extra generous We'll assume that to be April 12 not 11. Therefore the claim against you falls under ESC A19, so I personally would ring thenumber and start making a claim that they right it off as their error.
See. http://www.hmrc.gov.uk/esc/esc.htm
David
HarryW said:
Eric I realise you are a respected accountant but you can come across as a HMRC drone sometimes. Since when are you 100% responsible, it is a three way thing, payroll, HMRC and you, of the three you as the layman are the least qualified. As much as the HMRC drones may consider they don't have any responsibility they do. That's why they are paid as a Government body they also have published guidelines and code of conduct.
So starting again before you commit someone into writing a cheque without a fight.
I work on a simple premis, if you don't ask you never get.
It seems to me that as you are PAYE and you have the requisit P45 @ 60's the HMRC does so too, we'll call it information held. As the claim against you is for 09/10 the tax man has 12 months after the end of the tax year to get it right. Being extra generous We'll assume that to be April 12 not 11. Therefore the claim against you falls under ESC A19, so I personally would ring thenumber and start making a claim that they right it off as their error.
See. http://www.hmrc.gov.uk/esc/esc.htm
Who said he shouldn't fight his corner?So starting again before you commit someone into writing a cheque without a fight.
I work on a simple premis, if you don't ask you never get.
It seems to me that as you are PAYE and you have the requisit P45 @ 60's the HMRC does so too, we'll call it information held. As the claim against you is for 09/10 the tax man has 12 months after the end of the tax year to get it right. Being extra generous We'll assume that to be April 12 not 11. Therefore the claim against you falls under ESC A19, so I personally would ring thenumber and start making a claim that they right it off as their error.
See. http://www.hmrc.gov.uk/esc/esc.htm
Eric Mc said:
HarryW said:
Eric I realise you are a respected accountant but you can come across as a HMRC drone sometimes. Since when are you 100% responsible, it is a three way thing, payroll, HMRC and you, of the three you as the layman are the least qualified. As much as the HMRC drones may consider they don't have any responsibility they do. That's why they are paid as a Government body they also have published guidelines and code of conduct.
So starting again before you commit someone into writing a cheque without a fight.
I work on a simple premis, if you don't ask you never get.
It seems to me that as you are PAYE and you have the requisit P45 @ 60's the HMRC does so too, we'll call it information held. As the claim against you is for 09/10 the tax man has 12 months after the end of the tax year to get it right. Being extra generous We'll assume that to be April 12 not 11. Therefore the claim against you falls under ESC A19, so I personally would ring thenumber and start making a claim that they right it off as their error.
See. http://www.hmrc.gov.uk/esc/esc.htm
Who said he shouldn't fight his corner?So starting again before you commit someone into writing a cheque without a fight.
I work on a simple premis, if you don't ask you never get.
It seems to me that as you are PAYE and you have the requisit P45 @ 60's the HMRC does so too, we'll call it information held. As the claim against you is for 09/10 the tax man has 12 months after the end of the tax year to get it right. Being extra generous We'll assume that to be April 12 not 11. Therefore the claim against you falls under ESC A19, so I personally would ring thenumber and start making a claim that they right it off as their error.
See. http://www.hmrc.gov.uk/esc/esc.htm
ok you didn't say those words, i did as that is where it was going, you've not been exactly encouraging either....Can I start with the obvious ? Why was the code so wrong - did you move to a job with higher benefits eg company car, health insurances, share bonuses etc ?
There's nothing to get wrong on straight salaries and seen a lot of people not inform the revenue of a company car and then get to the end of the year and express surprise.
As above they send a tax code copy to you and there are weasel words on it putting it in your court
There's nothing to get wrong on straight salaries and seen a lot of people not inform the revenue of a company car and then get to the end of the year and express surprise.
As above they send a tax code copy to you and there are weasel words on it putting it in your court
I have spoken to the OP.
I will leave it to him to post as much info as he thinks fit, but the issue is with the old employment and the tax code used. As HMRC would have received a P45 in summer 2009, I believe under the terms of ESC A19 that they had to 5 April 2011 to assess the underpayment.
I advised the OP to initiate a claim with immediate effect.
David
I will leave it to him to post as much info as he thinks fit, but the issue is with the old employment and the tax code used. As HMRC would have received a P45 in summer 2009, I believe under the terms of ESC A19 that they had to 5 April 2011 to assess the underpayment.
I advised the OP to initiate a claim with immediate effect.
David
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