We’ve had a few cases in the last year of people coming to us who’ve had a tax bill from HM Revenue and Customs (HMRC) when they weren’t expecting one. It’s obviously not very nice, but it can be quite distressing. The one’s we’ve dealt with have one thing in common – PAYE.
Of the cases we’ve dealt with, the individuals haven’t been doing anything complicated with their tax affairs, simply being paid under PAYE or receiving a pension.
So if you’ve received a tax bill where HMRC say you owe tax from a couple of years ago, it obviously needs paying. Right?
Well not necessarily. HMRC will examine taxpayers affairs from time to time and will issue tax demands where an underpayment has been made. However, there is an Extra Statutory Concession in place, A19 (ESC A19), which says that HMRC will forego the tax if they have failed to act on information sent to them and it is more than 12 months after the end of the tax year when they ask for the tax. For example, if the tax is due for the 2011 tax year (the year to 5 April 2011), HMRC have until 5 April 2012 to ask for it. If they don’t, and the taxpayer can prove that HMRC have been sent the correct documentation that would have enabled them to collect the correct amount of tax, they will not collect the tax.
Please note, ESC A19 is a concession, and is not embodied in law, so there is no legal right to expect it. However, when we have made claims, and provided the necessary evidence, HMRC have been accommodating.
All the cases we have handled have been connected to us through relatives of clients, but we believe that there will be thousands of taxpayers who receive these demands and simply pay. As mentioned above, the cases we’ve dealt with concerned employees – they are not self employed, and are therefore not used to dealing with either HMRC or accountants. The initial instinct, as galling as it may sound, is that if HMRC have written to you saying that tax is due, then it must be due. The amount of tax due may be quite substantial, as this case highlights.
Therefore, if you know anyone who’s been asked to pay up, even if they’ve already paid, it may be worth examining to see if there is the opportunity to appeal.