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.