Tools: Extra Statutory Concession A19 (ESC A19)

 In ESC A19

HMRC have a huge amount of power – and they are getting more and more all the time; a tax barrister recently told me, “If the police were getting powers like HMRC are getting there would be people demonstrating in the streets, but because it’s tax they are getting away with it.” But there are chinks in the HMRC armour and ESC A19 is one of those important chinks.

Deep within HMRC’s culture is a core belief that they simply cannot be wrong. I know it’s difficult to believe, so I’ll give you an example.

Back in 2010 HMRC found that an estimated 2.3 million people underpaid income tax over two tax years owing to errors in their Pay As You Earn (PAYE) tax code. In an interview with BBC Radio 4’s Money Box, Mr Hartnett (the then HMRC boss) insisted the situation was not “extraordinary” and rejected claims HMRC was to blame. I’ve read the papers, listened to the media and heard stories of HMRC blunder and IT failure – neither of those are true,” he said…”I’m not sure I see a need to apologise.”

It was HMRC’s fault and Mr Hartnett did apologise.

My point here is to show the arrogance within HMRC’s culture, when they’ve clearly made a mistake they simply turnaround and say, “Not our fault”.

So – sticking with tax codes for the moment – if you go to HMRC and say I’m on tax code x and I want to check it’s the correct code and HMRC say that it is, then two years down the road it turns out it’s not correct and you’ve paid too little tax HMRC will say, “Even if we gave you incorrect information about your tax code it’s not our fault, because ultimately the responsibility rests with you.”

This is where ESC A19 comes into play, here’s the exact wording.

If HMRC don’t act on information you can ask HM Revenue and Customs (HMRC) to cancel your tax arrears if you think they’ve made a mistake because they failed to act on information they had.

You can make a request if all of the following apply:

• HMRC haven’t used tax information provided to them, eg about a change of income or job
• HMRC told you about the arrears more than 12 months after the end of the tax year in which they received your information
• you have a reasonable belief that your tax affairs are up to date

Tax information could come from:

• you
• your employer
• the Department for Work and Pensions (DWP)

Self Assessment

You can’t normally cancel tax owed via Self Assessment, unless there are exceptional circumstances, eg where HMRC:

• told you about 2 or more years of PAYE tax owed
• failed to act on information you’ve given them more than once

And there it is right on the end! If you are self-employed and you’ve given HMRC information that they haven’t acted on (more than once) you have a strong argument to not pay any tax owed.

I know what you are thinking: if this ESC A19 thing is so important and HMRC is so powerful and arrigent why don’t they try to remove it?

Well they have, for years, but that’s another story altogether. I should add that this is a concession rather than law which makes it all less cut-and-dried but the principle is there and this is how it works.

In short ESC A19 is the nearest thing to a ‘get out Of Jail free’ card you can find outside Monopoly.

 

ESC A19 Flowchart

HMRC Guidance

HMRC’s guidance to customers on their website: https://www.gov.uk/hmrc-did-not-act
HMRC’s internal staff guidance can be found in their procedural manuals. It is too long to reproduce here, but if you wish to read it all, you can find it on their website: http://www.hmrc.gov.uk/manuals/pommanual/paye95000.htm

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Showing 2 comments
  • Les
    Reply

    I was unfortunate enough to receive a back dated tax bill for £15000 from HMRC some 3 years after I retired. Although I had spent more than 40 years on PAYE, HMRC saw fit to summarily transfer this debt to SA with its much harsher collection regime.

    I requested consideration under A19, and spent the next 18 months fighting HMRC, the supposedly independent Adjudicator, and the Ombudsman. Through my MP I also raised the matter with the Chancellor.

    My request was refused at every turn because the only evidence I could find that showed HMRC had been previously informed of my income was via P14’s. To add insult to injury, I later found out that HMRC had changed the rules again to allow P14’s to be admissible evidence in support of A19. This was too late for me however, and I had to pay this bill from my retirement savings drastically reducing my quality of life. The constant stress also made my wife ill.

    To anyone thinking of applying for an A19 exemption I say best of luck. HMRC are a twisting and incredibly inefficient bunch of liars who because they are allowed by Govt to write their own rules as they go along will make it virtually impossible for you to fight them at every turn.

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