Save ESC A19 petition launched

Leading tax barrister and writer Keith Gordon has started an online petition to preserve Extra Statutory Concession A19 (ESC A19) as it is.

HMRC is currently consulting on proposals to “clarify” the concession that applies in situations when the department fails to act on information provided by the taxpayer.

HMRC’s amendments are “misconceived and misleading,” Gordon argued.

At the Wyman tax symposium in July, Gordon warned the assembled tax community that HMRC was seeking to change the concession because it was working and helping those for whom it was intended.

Between 2005-8, internal neglect of PAYE reconciliations and computer migrations allowed a backlog to build up. After all the old coding errors came to light, ESC A19 could cost the department up to £1bn in foregone repayments.

“The Revenue couldn’t afford that, so they had to rewrite rules,” Gordon argued.

Having seen several cases where ESC A19 was being denied, he commented: “ESC A19 is designed to be a get-out-of-jail free card available to the country’s poorest taxpayers who are told of old tax liabilities several years down the line.  It applies when HMRC have simply failed to use the information available to them and the taxpayer could reasonably have believed their tax affairs were up to date.

“In the past couple of years, HMRC have attempted to reinterpret their own guidance simply to avoid applying the concession in the very cases for which it was designed.

“This has caused unnecessary anxiety for thousands of taxpayers, many of whom will find it impossible to fund the unexpected debt.”

While researching and writing about the issue, Gordon became increasingly outraged by both the nature and tone of HMRC’s proposals.

In summary, HMRC managers changed internal guidance to how they want it to read. They then decided to change their practice in line with their revised internal guidance and justified the change by saying it is not in accordance with their own guidance.

The deadline for comments on the ESC A19 consultation falls on 24 September.

“I hope that the consultation is not a foregone conclusion,” he said, “but there appears to be a strong determination by HMRC officers to ensure that the changes take place.

“This is a serious matter that needs a united front from the tax profession and I felt a petition was the best way of co-ordinating this at short notice with mininimal resources.

“My hope at this stage is that someone very senior at HMRC or ministerial level will realise that the proposal is founded on a considerable amount of deceit. I use these stong words because I am particularly concerned there is a level of institutional dishonesty in this part of HMRC.”

The petition has already provided further evidence of cases where ESC A19 is being wrongly denied. Gordon encouraged accountants to add their views and evidence on the petition form and said he would be presenting this, plus material from AccountingWEB and Taxation as part of his formal response to the consultation.

The Do not change ESC A19 petition reads:

HMRC’s proposal to “clarify” ESC A19 is misconceived and misleading. The present wording is perfectly clear and HMRC should revert to their former practice of respecting it. HMRC’s proposal is merely a fig leaf, designed to legitimise their recent practice of denying ESC A19 to the very individuals for whom it was intended to apply.

Comments
mr. mischief's picture

Please sign this!

mr. mischief | | Permalink

Please sign this.  It's bad enough that HMRC are incompetent, under-staffed and inefficient.

Now they also want to behave like spivs, rogues, whatever you want to call it.  This is an utter disgrace and we must stop it.

carnmores's picture

thats a little unfair    1 thanks

carnmores | | Permalink

incompetent and ineffcient is pejorative - it would be fairer to say that they struggle because they are overworked under staffed and not trained well enough  - i dont see any point in trying to rub their noses in it, we will not get anywhere with that approach

I have signed

davidross | | Permalink

My comment was;

The ESC works well and is un-bureaucractic. The change would just put money into the hands of Insolvency Practitioners

Fluffy Bunny

ThornyIssues | | Permalink

carnmores wrote:

incompetent and ineffcient is pejorative - it would be fairer to say that they struggle because they are overworked under staffed and not trained well enough  - i dont see any point in trying to rub their noses in it, we will not get anywhere with that approach

Is it not such "fluffy bunny" mentality that allows status quo to persist and real issues to go by the way side? While I agree that being confrontational is not the way to go, I see no reason why calling a spade a spade is unwarranted. 

carnmores's picture

fluffy bunny

carnmores | | Permalink

you are so inaptly named :-)

to a degree i agree, i just think that dissing one and all is not the best way forward

I believe the ICAEW (at last doing something useful - hows that for pejorative) is taking up the cudgels under the consultation process

ESC A19

geoffwolf | | Permalink

HMRC incompetence also relates to sending out supposed corrections to SA tax returns without a second person in HMRC having to check the keying in or the result.. If they did this it would save them an enormous amount of flak.

ESC A19 Petition

M Shapland | | Permalink

I have signed this days ago. Found link to petiton via the Taxation Faculty web site...

what I resent the most is that HMRC are trying to apply the new text of ESC A19 before the consultation period has been completed and any amendments/corrections have been made/agreed..

thi sis clearly a policy which has been passed on from above..

 

Ignored as usual

Ian McTernan CTA | | Permalink

Sadly like most 'consultations' I feel that this one is more window dressing and the changes will go ahead regardless.  I signed the petition anyway.

I have dealt with several cases where I sought ESC A19 treatment.  One I recall in particular involved a non-UK national employed by a large UK firm where a coding of BR was issued by HMRC and applied by the company on an employee earning 100k per annum, complete with P11D benefits.  For 5 years.  Client had no reason to query it as he had no knowledge of the UK tax system and assumed he was paying the right amount of tax especially as he was employed by a large firm.  It only came to light when he decided to contribute to a pension scheme, his advisor spotted the lack of higher rate tax and referred him to me.  

Along the way, the Revenue flatly denied they had received information that they had failed to act upon- it seems P60s and P11ds don't count as 'information' as they are not 'returns'.  When I queried this it turned out that actually no one looks at P14's and they are a complete waste of time!!

To cut a very long story short, after appealing to the Ombudsman (who said they could not rule as it was a ESC) it was the threat of publishing the whole sorry story and revealing the depths of the case that finally got the tax dropped and the ESC applied.

This shouldn't be an ESC, it should be a piece of legislation to protect us from HMRC using the steamroller approach.  And before anyone asks, I think HMRC staff generally do as best as they can given the circumstances and rules under which they are asked to work and the training/indocrination they go through.

ESC A19 Petition

katmat | | Permalink

 In my experience, HMRC have crossed the line from dealing poorly with taxpayers affairs due to errors caused by overwork and poor training into something more serious and, frankly, totally unacceptable.  The way that HMRC have sought to deny the concession to valid claims  is bad enough but then to try to rewrite the concession to permit unfair treatment of taxpayers represents cavalier tactics at best and downright dishonesty at worst. The worry and stress caused to taxpayers who rely on HMRC to get things right is a scandal and another example of HMRC picking on easy targets and allows them carte blanche to offer a sub-standard service in the future.

 

 

 

jdstone's picture

ESC A19 link

jdstone | | Permalink

The link that you will need to sign the petition is http://www.change.org/en-GB/petitions/hm-revenue-customs-do-not-change-esc-a19.

ESC A19

Jack the Lad | | Permalink

This is appalling, but not unexpected from an organisation which has failed miserably to follow its own "Charter" of some years ago, and then sought to change it when they realised the standards were too high.  I'm with Mr Mischief on this.

I have had several claims under this ESC, not all successful.  One was so large ( over £12,000 ) and so obviously came withing the concession, but was still denied, and neither the Adjudicator nor the Ombudsman could do anything about it, despite the duty owed by HMRC to the Taxpayer to get things right.  I am in the process of dealing with another, but expect the same result.

ANOTHER CORPORATE AUTOCRACY

david5541 | | Permalink

how can hmrc change the rules if it thinks its not making mistakes?

anyone on paye is funding the coffers of mp's and government officials-including those- government officials NOT-on PAYE

the abolition of esc19 will be regressive and favour higher rate taxpayers who can afford an accountant

imagine if uk gaap changed the rules so hmrc reporting could be on a turnover only basis! because accountants trusted their clients as much as HMRC reckons it can rely on and trust its PAYE/IT systems?

the abolition of esc19  is a sign of a hightened sense of importance by HMRC MANDARINS who are out of touch with demotivated and demoralised hmrc staff-let alone the public-its a pity we cant all collect their FAT publice sector pensions on retirement,

John Stokdyk's picture

Comments from HMRC

John Stokdyk | | Permalink

We received the following information from HMRC and are happy to include it here to ensure a full picture is presented in this debate:

“We welcome all contributions to the ESC A19 consultation. We do not expect everyone to have the same level of knowledge as a tax professional, and look at individual circumstances on a case by case basis. This consultation is about working towards a better understanding for taxpayers of what we expect of them but also what they can expect of us.”

[NB: Some of the previous contributions on AccountingWEB - including those from Keith Gordon - voiced criticism that end of year PAYE returns are not treated as information as defined by the concession. HMRC's comments on those points have been posted on the original article]

“Finally as the annual end of year reconciliation exercise has returned to its normal annual Summer timetable then ESC A19 wont apply except in a very small number of cases.”

computer systems which HMRC think are perfect

david5541 | | Permalink

the theme here seems to be a combination of 3 things.

a) the lack of technical competence in alot of the hmrc computer systems-such as the one producing the p800; and many others as you will see from a recent post of mine

b)not much feedback from internal hmrc technical staff on the "end user" failings of hmrc computer systems-quote "NIRS2"-unquote

c)whether you are basic rate or higher rate tax payer the p800 is a prompt to the taxpayer to file a self assessment return/or r400 after the event to collect/reclaim any tax deficit/surplus-since it will only lead to a coding adjustment-is that right? - hence the headlnes not so long ago about chasing people for tax they did not owe-as a result of the fancy new hmrc system 

ESC A19

markabacus | | Permalink

As I've already put on another posting, I'm dealing with A19 claim, ongoing since Dec 11, went to the Adjudicator's Office [AO] the other week. I rec'd on Monday 10th an acknowledgement. It advised it could be several mths before the investigation even begins.

I sent a copy of our letter to AO to the client's local MP as instructed

Briefly the client has 2 sources of income, NHS and military pension and is a higher rate taxpayer. Nothing has changed since 2000 but HMRC are claiming they weren't aware despite their on P800T in 2001 showing both sources.

No wonder AO is backlogged. Took them 4 weeks to acknowledge my letter.

 

 

ESC A 19 Petition    1 thanks

Andrina | | Permalink

I think it's shameful of H M revenue & Customs to be allowed to make unacceptable mistakes and get away with it. The average 'man on the street' taxpayer does not understand the system, particularly where they are not represented. He/she assumes their tax affairs are in order and managed by the people who are supposed to know what they're doing and then they get hit by big bills which have arisen because HMRC have not done their job properly. And now they want to bring in new arrangements so they can get away with this and leave the poor taxpayer in despair!