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ESC A19 Question

ESC A19 Question

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The history – my client is dealt with purely under PAYE.  In 2003, she retired from her local government post and started receiving a local government pension.  At the same time, she started employment with a charity.  Both sources of income added together made her a HR taxpayer.

Unfortunately she was given the normal PA for both her pension and her employment.

However, HMRC did not realise that she was underpaying her tax until 2011 when they raised a demand going back 3 years (2008, 2009 & 2010).  Total amount tax due approx. £10k.

We claimed relief under ESC A19 on the basis that it was more than 12 months after the end of the tax year, that HMRC had sufficient information to spot the mistake (P14’s), that she knows nothing about how the tax system works, and was receiving income from 2 large employers, etc..

HMRC have now replied saying that ESC A19 does not apply.  Their reply is as follows:

“The reason I have refused your appeal to have your client’s tax remitted is due to your client’s failure to notify us of the commencement of their taxable income at [local government pension].  Due to this failure of notification we couldn’t assess your client’s records and the incorrect tax code was operated against your client’s income.  It is the responsibility of the taxpayer to check the code on their payslips to make sure the correct code is in operation.

The first information that we received about your client’s income from this pension provider was on form P14 which we received from this employer.

We are able to give up some underpayments of tax under ESC A19 if the tax underpaid has resulted from our failure to make use of information and certain conditions have been met.  Information which is relevant for the purposes of ESC A19 is limited and typically is provided in year by the employer or employee.  This does not include the P14 (an employer’s record of pay provided and deductions made) which is received after the end of the tax year as part of the employers end of year return.”


Where do I go from here?  The two avenues I can think of are:

-          I don’t think it was my client’s responsibility to notify HMRC that she was receiving a pension, surely it was the pension provider who would have acted on either a P45 or a P46.

-          It was not my client’s fault that HMRC had sufficient information but was unable to identify the problem(she received a full personal allowance from an employer and a pension provider for 7 years)

However, I think we're getting into a situation where HMRC will just shut up shop, I don't agree with them and they don't agree with me.  I believed that my letter claiming relief was quite comprehensive.  Would be great to hear if anyone else has dealt with this sort of situation.

Any comments appreciated.

Replies (16)

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
25th Jul 2011 13:41

HMRC inconsistency

HMRC are being utterly inconsistent in their approact to ESC A19 cases, remitting some and disagreeing with others - totally against their customer charter of being fair and even handed with everyone! We have a similar one (multiple employments, no pensions, personal allowance given more than once) and HMRC are arguing that it is our client's responsibility to have told them about the employment! I've told HMRC in no uncertain terms what I think about that. I agree with you that:-

-          I don’t think it was my client’s responsibility to notify HMRC that she was receiving a pension, surely it was the pension provider who would have acted on either a P45 or a P46.

However, as a higher rate tax payer in your case, I don't know if the usual liability to notify of additional tax due would be applicable in her case. Normally she would be given her 'standard' personal allowance tax code in one, and BR in the other. This would clearly still result in an underpayment of tax and a liability to notify HMRC.

Good luck.

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By ACDWebb
25th Jul 2011 14:15

What happened to

the P45 when she retired, and what did she do in answering questions on the P46 presumably one or other handed her as she didn't have a P45 to pass on?

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By justsotax
25th Jul 2011 14:25

what paperwork did she fill in at the time she started the chari

I presume that when she started receiving her pension she would have received notification of her coding, or been asked the question as to her other income before the pension provider devided upon an appropriate code.  I am guessing the the charity would have asked for a P46 to be completed (unless the P45 was still relevant at that time?)

I don't know, but presumably the pension provider issue some sort of paperwork to decide what code to operate....


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By Ernest N Dever
25th Jul 2011 14:47

I'm with HMRC I'm afraid...

... this lady seems to have had a substantial increase in income and a reduced tax bill and didn't stop to question whether that was right?

The concession does require that "the taxpayer reasonably believes that their tax affairs are in order", or similar words.  I'm not convinced that she could reasonably have held that belief.

You're quite right though that, as a concession, if you can't persuade them to apply it then you have to stop costing the client more money by arguing the toss.

Sell it like it is.  She will also have paid less tax than was legally due in 2003/04 to 2007/08 and has "got away with it".

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By Richardrussell
26th Jul 2011 05:15

Thanks for the comments

I have no idea what paperwork she completed when she started her charity job and pension.  Unfortunately, she has no idea either.  All I can think is that they started at broadly the same time, and she may have told both 'this is my only job', but that's just summising given the subsequent issue.

"... this lady seems to have had a substantial increase in income and a reduced tax bill and didn't stop to question whether that was right?" - no, she had a substantial increase in income and an increased tax bill.  It's just that the tax bill did not go up enough.  As I explained to HMRC, she's a social worker, she deals with vulnerable people, she has got no aptitude for finance and (as it turns out wrongly) assumed that she was receiving income from two large employers who employ finance professionals who would undoubtedly get her tax right - as do a huge number of individuals who are employed by large organisations.

I genuinely thought I had a case that could work.  So am I right in thinking there's no right of appeal given that it's a concession - or indeed further guidelines?  The ESC A19 blurb is fairly high level, there's no mention, for example in my scenario, as to what constititues an acceptable form.  I would have thought a P14 would have been relevant, it's not my client's fault that the PAYE system couldn't join up.


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By uktaxpal
26th Jul 2011 07:19

1st Tier Tribunal ?

Is it worth taking to tribunal?

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By Ken Howard
26th Jul 2011 08:01

I agree with HMRC (sadly)
There are a few issues here.

Firstly, she was a hr taxpayer, so, strictly speaking, she should have told HMRC herself, especially if there is any other income liable to HR tax, such as interest or dividends, potentially requiring an SA return. If she didn't, that's one-nil to HMRC.

Secondly, she is wrong is relying on the payroll depts of two large organisations to get her tax right. Neither would have known of the pay paid by the other, and nor would they be in a position to do anything about it if they were. PAYE coding notices are issued by HMRC - all an employer can do is follow the PAYE code issued to them, or the new employee procedures via P45/P46.

Thirdly, if she didn't keep copies of P45/P46 and can't remember what she completed and handed to which employer, then she is in a poor position to defend her case.

Fourth, HMRC are right - the rules behind the ESC don't regard a submitted P14 as being valid notification of a new source of income.

I think you have a very weak case.

Your best bet is to get the client to contact both employers to see if they have their files going back far enough and ask them exactly what they submitted to HMRC and when, i.e. P45 or P46. Only then will you have a better case, if indeed, both employers did actually submit the right forms, as provided by your client. But it will also prove otherwise if your client ticked the wrong box on the P46 or wrongly gave the same P45 to both employers, either of which I'd suggest is the true cause of the problem here, and as such the ESC would not be given.

As others have said, your client is better off due to the earlier years they aren't chasing for, so she's a winner due to whoever's incompetence, which is a good result. You need to hammer home to her that if her tax had been right from day 1, she'd be a lot worse off. I don't think you'll get sympathy from HMRC with her being a HR taxpayer as you can't realistically claim poverty or hardship.

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By JulieY
26th Jul 2011 13:53


It doesn't say in the wording of the concession that a P14 doesn't count as information supplied. In fact, the wording of the concession says nothing about what qualifies as notification and what doesn't. Who is to say what particular document counts as "information supplied"? If there is no definition in the actual concession, surely the normal dictionary interpretation of the words comes into play? HMRC cannot invent their own interpretation, or more importantly, invent their own interpretation, tell no-one about it and then wheel it out as "internal guidance" when it suits them.


A P14 is "information" and that information was supplied. End of.


We have a case very similar to this. We have had several knock-backs, but we have persevered and are now providing all our correspondence to the Adjudicator. It is now a point of principle for us and we won't pass on these costs to the client. I would strongly suggest that you also pass correspondence for your case to the Adjudicator. It's not going to cost you much to copy them the letters which have already been done.

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By Ken Howard
27th Jul 2011 07:53

P14 isn't valid information for A19 purposes
Sorry, Julie, but the HMRC manual re the concession clearly states that the P14 isn't valid information received from an employer. The only information they regard as valid for the concession is:-

Form P45
Form P46
Form P46 (Pen)
Form P46 (Car)
Form P11D

Have a look at their manual:-

It clearly says

"Any other information which shows evidence of employer contact or correspondence which would affect a taxpayer’s code, received during the tax year can also be considered. But, this does not include receipt of forms P35 or P14 which are employer end of year returns."

NB the important bit is "receiving during the tax year".

You need more than P14's to achieve a successful claim under A19. In the OP's case, it WILL hinge on what P45 and P46 forms were submitted, by whom, when and what was written on the P46. That's why it's important to find out what the employer's sent to HMRC. If they can prove that the right P45/P46 forms were submitted to HMRC at the time, then they'll get the concession granted. Relying on HMRC to pick up on what's going on from P14's submitted afterwards is outside the scope of the ESC.

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By JulieY
27th Jul 2011 09:52

Manuals are not law

Sorry, I still don't agree.

The manuals are internal guidance for HMRC and give HMRC's OPINION. They do not have any force of law.

I fully appreciate that I am up against it here in terms of winning this case because it cannot be taken to a tribunal and it will be up to the adjudicator to make a decision. However, as I have said, there is a principle to be argued here. I am still waiting for an explanation from HMRC as to why a P14 is not "information". And not one based on "because we say so".

In my opinion, a P14 contains all the information you will need to identify a taxpayer. Once the P14 is processed, it will become apparent if a taxpayer has two or more employments. If the P14 was processed shortly after May each year, a code could be amended for the current year and/or an assessment issued for the previous year pretty quickly. There is simply no excuse for delays of several YEARS!


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By Ken Howard
27th Jul 2011 11:31

The ESC isn't law either - it's a concession
Yes, I know that manual's aren't law, but neither is the ESC A19 - it's a concession. Given the absence of any law one way or another, the manual is the nearest thing there is to the rule, and given that it is only a concession granted by HMRC (not Parliament), then it's entirely reasonable that HMRC can set their own rules.

Your only chance is under the fairness principal of the Taxpayer's Charter, where if you can find that someone else with the same circumstances had their tax written off under A19, then you are right to insist on equal treatment.

It's not a question of whether HMRC "should have" dealt with the P14s and noticed multiple employments. That's a different argument. For the concession to apply, there is a requirement for them to be notified in prescribed manners and not to have acted on those notifications. Unless you can prove P45/P46 was submitted, or the taxpayer told HMRC by other means, then you don't meet the conditions of the ESC.

I entirely agree that HMRC should be on top of these kinds of things, and they should have a burden put upon themselves to properly deal with information given to them, but that's a different matter and is really down to lobbying MP's etc to get some proper service standards enshrined by law. In the absence of such a law, then you either comply with the rules of ESC or you don't.

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By halesir
27th Jul 2011 12:45

ECS A19 Refusal

I had a similar case a few years ago. Two employments, two lots of PA = big underpayment. HMRC refused ESC A19 until I pushed it through to Complaints Manager. Then there was a complete change of mind. The Complaints Manager admitted that their computer should have tied up the NI numbers for the two sources at the end of the first year and identified the problem. Result was that tax was written off and my fees were paid by HMRC. Keep pushing them!!

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Replying to Gowtham:
By fredf
23rd Aug 2011 10:30

never mind the "instruction" manuals -what about the legislation

TMA 1970, S.7(3) states quite clearly that a taxpayer is not required to give notice of higher rate liability is he has just PAYE sources - i.e. S.7(4) for P60's and S7(5) for P11D's.  It is however correct to pursue if taxpayer has any investment income S.7(6).

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By pat27
23rd Aug 2011 10:43

When your client retired she should have been issued with a Form P161 for completion on which she would be required to enter details of her pensions, employment and any other income including investment income. I think HMRC are saying in a roundabout way that your client did not complete and return this form.

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By Richardrussell
26th Oct 2011 10:43


Thank you for all the comments above.  Just to let you know, we found a copy of the P160 from 2002.  We sent a copy of that, and the other supporting in year document (P45), and we won.  The client doesn't owe anything.

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By Elaine Bass
30th Aug 2012 17:04

ESC A19 claim - rejected


My case is similar to some of those listed.  My State and NHS Pensions became payable from April 2007 but I continued working for the NHS.  My pension provider notified HMRC in April 2007 and I believed my tax affairs to be in order; I was earning more and paying more tax.

I received notification of underpaid tax in November 2011 (£2.5K).  HMRC has hidden behind all manner of excuses for their mistake all of which have been disproved.  I have sent HMRC copies of all P45s, P60s and notices of coding and a copy of the letter from NHS Pensions confirming that they advised HMRC of my pension in April 2007.  Given that P60s were issued at the end of each working year HMRC also received information about my income in April 2008, 2009, 2010 and 2011.  They failed to use my NI number to link the information provided so not only made the mistake in April 2007 - they also failed to rectify it over the following 4 years.

All my challenges to HMRC have been rejected and my appeal of 17 July 2012 was declined.  I am about to go to Tribunal - talk about David and Goliath !!

Any advice or encouragement would be welcomed


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