HMRC errors in issuing PAYE correct coding to wrong employer and wrong coding to correct employer!
I apologise in advance for the long explanation...
My (prospective) client (Joe Charles Bloggs) has been, and still is, a higher rate taxpayer for the last 20 years with the same very large employer (ABC Ltd). Salary and bonus varies each month and therefore there is not really a typical pay month. SA Tax Returns have never been submitted.
Up to 2005/06 cumulative codes were operated and all was ok - higher rate tax collected through the tax coding and tax on investment income collected by an HMRC tax review form (no Tax Returns submitted).
In 2006/07 HMRC seem to have gone into my client's PAYE record and made 2 erroneous changes:
1. They altered my clients name (i.e. from Joe Charles Bloggs to J B Charles) and then issued a BR coding to my client's address with the incorrect name on it but with the correct employer reference on it. (My client did not notice this and in any case probably would not have understood the significance of this.)
2. They issued a cumulative coding to my client in his correct name but with a tax reference for a completely different employer, completely unrelated to my client's employer ABC Ltd. However the name of this unrelated employer was such that had he noticed it, it would not have rung any alarm bells. The name was along the lines of "XYZ consultants" and could have been payroll agents for all my client would have known.
Although cumulative codings were issued to my client on a regular basis (with the wrong employer ref on them) the BR code was actually applied to his income. Due to the BR coding being applied my client has underpaid tax for several years.
HMRC have now raised tax calculations for 2008/09 and 2009/10 requesting several thousands of pounds for each year.
On contacting the unrelated employer, it now transpires that they had received codings in my client's name and they told HMRC about the problem a couple of years ago albeit that they kept no records relating to this.
1. Does ESC A19 apply or does this only relate to delays rather than errors made by HMRC?
2. Will my client have to pay the underpaid tax for the years 2006/07 and 2007/08?
3. Will my client have to pay the underpaid tax for the years 2008/09 and 2009/10?
I would be grateful for any pointers/experience that others have had in a situation like this.
Thank you in advance
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