HMRC delays/errors in using information

If you have been sent a Tax Calculation, or P800, showing you have underpaid tax, in certain circumstances HM Revenue & Customs (HMRC) may agree not to collect it exercising its discretion under 'Extra Statutory Concession A19' (ESC A19).

ESC A19 only applies to people who owe Income Tax or Capital Gains Tax but under exceptional circumstances HMRC will consider repaying tax you have already paid.

This guide explains the circumstances in which HMRC will apply the Concession and how you can ask for it to be applied.

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When does ESC A19 apply

HMRC will only agree not to collect the underpaid tax if all the following circumstances apply:

  • HMRC received information which affected your tax code
  • HMRC failed to make proper and timely use of that information
  • failed to notify you of the underpayment within 12 months of the end of the tax year in which HMRC received the information
  • it was reasonable for you to believe your tax affairs were in order

This means, for example, if you receive a Tax Calculation, or P800, in the 2013 to 2014 tax year showing that you have underpaid tax in the previous tax year (2012 to 2013) then ESC A19 will not apply.

A tax year runs from 6 April in one year to 5 April in the following year.

However, in exceptional circumstances, HMRC may consider cases where your underpaid tax is notified within 12 months of the tax year in which the information was received, subject to certain conditions (see Exceptional Circumstances below).

ESC A19 applies where there are arrears of tax. However, in some circumstances, if you have already paid the tax, and subsequently you meet the other conditions of ESC A19 so that the tax should not have been collected from you, HMRC will consider as part of its review, whether it has the discretion to repay the tax paid.

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What counts as information

Information that HMRC will use to change your tax code so that you pay the right amount of tax includes:

  • a change in your income
  • a new job or an extra job
  • a taxable benefit you get from your employer, for example a company car
  • starting to receive a work or private pension
  • getting state retirement, disability or widow's pension

This is not a full list.

This information can come from a variety of sources - for example a letter from you or your agent, or a notification from your employer or the Department for Work and Pensions (DWP).

If HMRC did not receive any information to use or to act upon, ESC A19 cannot apply.

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When HMRC must use information by

HMRC can only apply ESC A19 if it hasn't used information that would affect your tax, within 12 months from the end of the tax year it receives the information.

For example, on 1 August 2012 HMRC received information about the start of a new pension in the tax year 2011 to 12 (tax year ending 5 April 2012). For the purposes of the Concession, if HMRC issued a tax calculation reflecting this information by 5 April 2014, ESC A19 would not apply, unless there were exceptional circumstances as mentioned below.

If the tax repayment you get from HMRC is more than it should have been they can ask you to pay back the extra money. But HMRC must contact you to ask for the extra tax back within 12 months of the end of the tax year in which you received it.

Exceptional Circumstances

In exceptional circumstances HMRC can consider a request for giving up tax arrears under ESC A19 if it told you about unpaid tax less than 12 months after the end of the tax year in which it received information that changed the amount of tax due. Both of the following circumstances must apply:

  • HMRC must have failed more than once to make proper use of the facts they had received about one source of income
  • HMRC must have allowed your tax underpayments to build up over two tax years in a row - so you have underpaid it for at least two tax years

If these conditions are not met, then ESC A19 cannot be considered.

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Reasonable belief that your tax affairs were in order

HMRC also needs to consider whether it was reasonable for you to believe (before you received your tax calculation) that your tax affairs were in order.

It may take into account relevant details about your circumstances such as disclosed in notes of conversations with HMRC officials and customer records.

It will also consider any evidence offered by you, or your agent, about your personal circumstances explaining why you believed that your tax affairs were in order, or whether you were able to manage your tax affairs at the time.

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Asking HMRC to apply ESC A19

If you think the Concession should apply in the circumstances of your case, you should contact HMRC before you pay the underpaid tax. You will need to tell HMRC:

  • the tax year the request for ESC A19; is for
  • the amount of tax you've underpaid
  • what information you believe HMRC didn't use or think they should have used
  • the date the information was given to HMRC (if known)
  • the reasons you thought your tax affairs were in order
  • anything else you believe relevant such as an illness, disability or other personal circumstance that affected your ability to manage your tax affairs

Telephone or write to HMRC

HMRC will consider your request but may need to check some details with you before giving you a decision.

If your ESC A19 request is refused, you can ask for another HMRC officer to review the decision. There is no right of appeal if your ESC A19 request is refused, but if you still believe that you should not have to pay the tax, please read 'How to Complain to HMRC' to decide if your case has not been dealt with properly.

How to complain to HM Revenue & Customs

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More useful links

HMRC Extra Statutory Concession PAYE manual 'PAYE95000'