Pensioners get PAYE concession

The government this week back-tracked on its stance over PAYE underpayments when Treasury Exchequer secretary David Gauke confirmed that HMRC would apply Extra Statutory Concession A19 to pensioners who were faced with repayment claims.

In a written statement, the minister explained: “HMRC estimate that there are about 250,000 cases in respect of 2008-09 and 2009-10 where a taxable state pension has been paid by DWP and the tax due on this pension should have been collected through a tax code adjustment.”

Since pensioners who received a P800 calculation showing an underpayment would have a strong case for sum to be written off under ESC A19, the government has decided that HMRC should write off all the underpayments rather than requiring those affected to claim the concession individually.

With HMRC continuing to work on the backlog of PAYE reconciliations that piled up when it made the switch to its new NPS computer, the government has decided that no further underpayment notices will be issued for years earlier than 2007-08. Any amounts due for 2007-08 will be included, where possible, in the tax code for 2011-12 to collect money over the course of the next year, the minister added.

HMRC is moving on with its plans to introduce Real Time Information (RTI) to eliminate the need for reconciliations in the future, he added.

“It is pleasing that HMRC took on board our suggestion to review this group of pensioners for whom extra-statutory concession A19 would almost certainly have applied to write off the liability. This way the worry and hassle has been avoided,” commented John Andrews, Chairman of the Low Incomes Tax Reform Group (LITRG).

“It is pleasing that HMRC took on board our suggestion to review this group of pensioners for whom extra-statutory concession A19 would almost certainly have applied to write off the liability. This way the worry and hassle has been avoided,” commented John Andrews, Chairman of the Low Incomes Tax Reform Group (LITRG).

In Any Answers, meanwhile, Nick Morgan of tax-hell.co.uk has asked, What has happened to the ESC A19 flowchart? The logic tree detailing the conditions that apply for the concession has been removed from public view on the HMRC's web-based PAYE manual citing exemptions under the Freedom of Information Act 2000.

Continued...

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John Stokdyk's picture

Comments from UK200Group members

John Stokdyk | | Permalink

As is often the case, we were sent an interesting summary of comments from partners in UK200Group firms. Here's what some of them said:
 
David Ingall, partner, JWPCreers:
"Taxpayers changing from self-employed to employed or being pensioners can create confusion... Is this a scandal? Is this a fiasco? Are taxpayers hard done by or is it HMRC being faced by an impossible position? This is a story that can run and run, not helped by HMRC posturing on their role in raising funds for the government by stricter compliance. Cynically, one might take the view that the boring and unfashionable administration tasks are being sidelined in favour of the headline grabbing tax compliance issues. That may well affect the allocation of staff to the various areas of HMRC’s duties.
 
“Trying to keep track of millions of taxpayers is a daunting role and with reductions in staffing and the scale of computer systems required (not to mention the appalling track record of the government’s computer schemes) it is unsurprising that things do go wrong. It is the getting it right and the timescale that is important.”
 
Cormac Marum, partner, Harwood Hutton:
“The practice under A19 is to write-off tax where HMRC notify the arrears more than 12 months after the end of the tax year in which it received the relevant information and the taxpayer could therefore reasonably have believed that his or her tax affairs were up to date... It is on this basis that the 250,000 pensioners are getting their reprieve, and quite right too! But there is nothing in A19 which says that you have to be 65 to get its benefits. The BBC was ticked off... for being ageist.  There is no reason why HMRC should get away with being ageist as well as incompetent.”

 

 

HMRC still chasing the money

saki69 | | Permalink

Speaking to an IFA friend today whose Father was caught up in this, he tells me his Father has received a demand for payment - anyone else heard of this, I thought pensioner underpaid paye was being written off?