HMRC brings ESC A19 back from the brink
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.
In its summary of responses (480k PDF) to the ESC A19 consultation, HMRC noted that it received 72 written responses, including 20 from accountants and eight from representative bodies. Sixty-five of the responses raised concerns about removing the reasonable belief condition.
In response, HMRC said it had listened to respondents’ concerns over replacing the ‘reasonable belief’ test with the more objective ‘taxpayer responsibilities’...