Patience and persistence needed to win PAYE payouts

THE PERSISTENCE, PATIENCE and tenacity of many taxpayers have paid off with HMRC finally conceding defeat and writing off their demands for underpaid tax.

In the last week I have seen over £30,000 in underpaid tax across more than ten cases written off. This is a great result but a very small drop in the ocean in the continuing battle of the 1.4 million people who have been sent demands for under paid tax relating to previous tax years as far back as 2007/2008.

You may remember the details from September of last year. HMRC informed some six million people that they had got their PAYE wrong. Most of these had overpaid PAYE but for 1.4 million people an unexpected tax bill landed on their doormat.

Since then, along with a small team of volunteer accountants, I have been helping many people to fight the demands.

The basis of the fight centres on the Extra Statutory Concession (ESC) A19 which states that HMRC may agree to write off the tax due where they should have collected it because they were aware of the sources of income but failed to act upon the information provided.

More importantly the ESC A19 also states that in exceptional circumstances, arrears notified less than 12 months after the end of the relevant tax year may be written off where both of the following apply:

* HMRC failed more than once to make proper use of information received about a source of income
* HMRC allowed tax arrears to build up over two whole tax years

Now unless I have missed something, HMRC must have received the information about the sources of income because they have used it to be able to perform the belated PAYE reconciliations and send a demand for underpaid tax to the tax payers.

Frankly, if HMRC had performed PAYE reconciliations each year then they could have recovered the tax in adequate time. Surely this is their job!

If I send a bill to my clients three years after providing a service and asked them to pay more I think I know what the answer would be from them.

As it is, for whatever reason, HMRC’s failure to apply even basic reconciliation controls has meant a loss to the country’s coffers – at a time when we can hardly afford to lose a penny!

Should we expect more from HMRC?

My answer would be yes of course. In fact their very own charter states:

* We want to give you a service that is even-handed, accurate and based on mutual trust and respect. We also want to make it as easy as we can for you to get things right.

* We want to give you as much certainty as we can that you are paying or claiming the right amount.

* We will process the information you give us as quickly and accurately as we can and put mistakes right as soon as we can.

*We will be even-handed in the way we deal with you. We will take into account your circumstances and provide a consistent service.


It seems that HMRC just threw this charter out of the window in their handling of this PAYE fiasco!

Words like even-handed, mutual trust and respect are laughable given what I have seen.

They have written off tax in identical situations where they continue to chase others who may not have fought their corner quite so vehemently. Is that mutual trust, respect and even handed?

If the taxpayer should be certain that they are paying the right amount then HMRC need to ensure that they have the right systems, processes and of course people to do the job in hand.

Unless and until this country moves to a system of complete self assessment then HMRC must accept their responsibility for the effective, efficient and correct operation of a pay as you earn system of collecting taxation.

A system where it is not incumbent upon the individual to have to check that HMRC have processed their data correctly.

A system that can cope with individuals having multiple jobs, sources of income and many changes during a tax year.

A system that will be able to cope with whatever changes are brought about by the proposed merger of NI and Income Tax.

For now though – HMRC, shame on you!

It really is about time you take a look at how you have handled this whole fiasco, stop wasting taxpayers’ money in pursuing these cases, make a common sense policy decision to write off the underpaid tax for all years prior to the current year and move forward doing the job that you should be doing.

My advice to anyone who has a demand for underpaid tax – DO NOT give up and pay the tax.

Apply for an ESC A19 concession but be persistent, patient and tenacious!
It does work.

Elaine Clark is managing director of

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