Tried to use ESC A19

Tried to use ESC A19

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Client on PAYE who did not need to complete tax returns started to receive a company car and private medical during 2007/08. Revenue issued a 2007/08 tax calculation in February 2011 demanding £x tax due on the benefits and we were asked to advice him. Only one PAYE code was issued for 2007/08 for 522L  in January 2007. His employer showed the benefits on a 2008 P11D which was received by the Revenue on 27 June 2008. A PAYE code issued for 2008/09 in August 2008 did incorporate benefits from the 2008 P11D, but did not incorporate an adjustment to collect the underpaid tax for 2007/08. The 2009/10 PAYE codes issued   did not incorporate this underpaid tax either, although they did collect the underpaid tax for 2008/09. We have written to appeal under ESC A19/raise a formal complaint against the assessment 4 times and spoken to someone in the Specialist Team on the following grounds:

1. Failure to make proper and timely use of of the 2008 P11D by not using the information within 12 months after the end of the tax year in which the information was received ie by issuing a tax code or sending a tax calculation by 05/04/2010.

2. It was reasonable for our client to have believed that his affairs for 2007/08 were in order because he had not been issued with a 2008 tax return and he was on the PAYE system and that as a lay person he would assume that his employer was responsible for collecting his tax.

The last letter from the Complaints Service at the Revenue said that although they did not notify the client of the 2007/08 arrears within the time limit that they did use the 2008 P11D as they issued a 2008/09 PAYE code which included deductions for car benefit and medical benefit and that from this our client should have been aware that he had not previously been on the correct code and that it was not reasonable for him to believe that his tax affairs were in order. They also pointed out that the PAYE system is a means of collecting a provisional amount of tax and that tax calculations can be issued to correct the situation.

Is this worth pursuing further?

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By scottwright94
23rd Dec 2011 11:00

"Use" of P11D to issue 08/09 code not relevant.

It appears to me that HMRC are attempting to be clever by working within the wording of the concession to make it look like they have done as they ought to but in reality they have not.

 

Issuing the 2008/09 code in my view does not constitute "use of the information" with regard to the 2007/08 year in question. As a layperson, how is the employee supposed to know that because a 2008/09 code is issued in respect of 2008/09 that any tax is underpaid in respect of 2007/08?

 

I would argue something along the lines of:

 

"The PAYE system is a means of collecting a provisional amount of tax and that tax calculations can be issued to correct the situation" However; HMRC have failed to make proper and timely use of of the 2008 P11D because although a 2008/09 code was issued in August 2008, no tax calculation was issued in respect of 2007/08 until after 05/04/2010, why did they not issue a tax calculation for 2007/08 on the very same day as the 2008/09 tax code? (i.e. August 2008) This is clearly a failure on their part as any well run organisation would have done just that.

 

The use of information in respect of 2008/09 is a totally separate matter to the use of information to collect underpaid tax in respect of the earlier year and the two cannot be amalgamated in this way in an attempt to cover up an HMRC failure and not give up the tax as they rightly should.

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Me!
By nigelburge
23rd Dec 2011 11:14

Persevere!!

HMRC really hate ESC19 - almost pathologically it seems.

You just have to persevere.

As a last resort, you can get HMRC to actually assess the tax they say is due. Then you can appeal to the first tier tribunal and they will then consider ESC19. If there is no assessment, the Tribunal will not consider ESC19 by itself - that would have to be done by judicial review but Tribunals are now taking a pragmatic view and taking ESC19 into account in a valid appeal.

Perhaps even telling HMRC that that is what you are going to do may force them to stop playing silly b*ggers!

Good luck.

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By billgilcom
24th Dec 2011 01:07

ASSESS?

If you get HMRC to assess they will probably do this by issuing a tax return which would then result in interest flowing on the unapid tax..... after all if a return was issued your client would have to include the whole income for the year. Then where do you go with an appeal as the assessment would be made in accordance with the tax return.

Just persevere as clearly they failed to make timely use of the benefits information provided by the employer on the PX1D

Hope that this helps

[email protected]

www.wamstaxltd.com

 

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