With it being so close to the beginning of the new tax year it is no surprise at all that HMRC is once again grabbing headlines as a result of their continual bumbling antics. The latest fiasco pertains to last year’s shock tax demands when around 1.4 million people were sent a letter by HMRC requesting they pay back underpaid tax. The amount totalled a staggering £3.8 billion. Last September a sheepish looking HMRC admitted it had got millions of bills wrong owing to problems (now well documented) with the PAYE system.

At the time, accountants urged those who had been sent tax demands to appeal using A19, the “extra-statutory concession”. As a result of that David Gauke, a treasury minister, has disclosed that 23% of those who used the concession have had their tax debts cancelled. This is despite the fact that Mr. Gauke claimed in parliament last year that it “does not apply that often in practice and I do not want people to build up their hopes that it will offer some kind of panacea”. A further 250,000 pensioners had already had their tax cancelled under the concession.

Under the concession, HMRC will back down if the taxpayer can reasonably prove that their tax affairs are in order. There is also a 12 month rule under which tax can be written off if the victim was told by HMRC more than a year after the end of the tax year that information was provided and there is no limit to the amount of money that can be written off under the concession.

A spokesman for HMRC denied that the tax office had deliberately discouraged those who owed money to appeal under the concession although it would not surprise anyone if they had done this. “All our experience indicated that this concession which we developed will apply only in a small number of cases,” he said. 23% does seem to be the low number they were expecting and once again we’re all asking ourselves if HMRC actually know what they are doing.

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