164,000 pensioners cannot have underpayments written off

UP TO 164,000 pensioners had underpaid PAYE in 2010-11 but the government will not be able to write these debts off, Accountancy Age has learnt.

HM Revenue & Customs is set to publish details of PAYE reconciliation figures for 2010-11. There are 164,000 pensioners among those who have underpaid tax; this compares with 250,000 pensioners last year, who had their underpayments written off in January this year.

However, Mike Warburton, tax director at Grant Thornton, said that Exchequer secretary to the Treasury David Gauke has told him that the government will be unable to write off the tax of the 164,000 pensioners.

“Gauke said he does not have the power, it is a matter for HMRC commissioners,” Warburton told Accountancy Age. The government said that the 250,000 affected pensioners from last year would have qualified under Extra Statutory Concession A19.

However, Warburton added that the minister said they cannot do the same for 2010-11 because underpayments discovered within 12 months of the tax year they relate to cannot be written off under the wording of ESC A19.

Furthermore, the commissioners are guided by the 2005 House of Lords’ Wilkinson decision. “This states that if a statute says tax and it is not covered by a concession then you have to pay the tax, otherwise taxpayers have to be treated differently. So even if they want to be nice to pensioners, they can’t,” Warburton said.

He concluded by asking: “Is it right that the minister and HMRC are prevented from doing something sensible by what is effectively a judge-made decision?”