After winning a case on behalf of a client in which HM Revenue &
Customs (HMRC) was forced to back down and write-off more than £2,000 of
previously demanded tax, Elaine Clark of CheapAccounting.co.uk has accused the tax office of not applying its own rules correctly.
“This is a terrible case. [The taxpayer] receives incapacity benefit
as well as an NHS pension,” Elaine said. “HMRC was informed of the two
sources of income by the Benefits Agency and the NHS, but did not act on
the information provided.”
Elaine claimed under the provisions of Extra Statutory Concession
A19. The full version of the concession is quite lengthy, but basically
it says the tax office must waive tax owed in certain circumstances if
it makes a mistake. You could claim if:
- HMRC failed to act on information it had
- that failure lead to a tax underpayment
- it did not say how much was owed by the end of the tax year after the mistake was made
- it was reasonable for you to think everything was in order.
(If the tax office made more than one error, the time limit may not apply.)
If you have been sent a bill and you feel this applies to you, then
you may wish to seek further advice. Alternatively, there are a number
of draft letters available online. (Search for “Sample letter ESC A19”.)
HMRC correctly said it could not comment on individual cases and that
the concession would in all likelihood apply only to a small number of
cases.
The problem arises because our tax laws place the onus squarely with
the individual. Basically, if your tax is wrong, it’s your fault – even
if you were not aware of the situation or if the tax office made
mistakes. This is clearly ludicrous, especially given the complexities
of our tax laws.
Which is why we have ESC A19. It is an incredibly powerful clause –
without it HMRC would be almost unaccountable. Six million people could
be affected by recent mistakes by the tax office, through no fault of
their own, so the usual rules should not apply. Television programmes
such as Panorama and cases such as this have highlighted the problem.
Elaine is right – HMRC is failing to instigate the concession when it
could do. It is an Extra Statutory Concession that is being debated, so
surely it is not beyond HMRC’s remit to introduce a temporary measure –
something as simple as sending out a slip inviting a claim, with space
for the relevant details perhaps.
Ethically, this would be the right thing to do, but it would of course cost HMRC and by default the government.
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