An area that has received a lot of scrutiny recently is ESC A19 (HMRC delays in using information). The Adjudicator called together representatives of the Parliamentary and Health Service Ombudsman (PHSO) and HMRC to discuss the handling of these cases. This ESC is particularly relevant at present with all the extra tax bills that have been arriving on people’s doorsteps as a result of HMRC’s new PAYE computer systems becoming effective at checking PAYE tax deductions of the last couple of years.
The HMRC view on A19 in PAYE cases is that it rarely succeeds because the taxpayer should have known by virtue of coding notices that he was not paying the right amount of tax along the way. On our side, we know that most taxpayers do not understand notices of coding and trust HMRC to get their PAYE tax deductions right. It is a concern that the Adjudicators Office has a tendency to view A19 as HMRC do and not put themselves in the shoes of the taxpayer and look at what is reasonable for a person to understand taking into account the layout and content of coding notices.
The vast majority of PAYE “tax corrections” that received much publicity recently were overpayments due to taxpayers. This just proves that taxpayers believed their tax affairs were in order. If they hadn’t they would have been on the phone to HMRC at the time to ensure their codes were corrected so they paid less tax. But of course this did not happen because taxpayers did not understand they were paying too much tax.
HMRC website reference – http://www.hmrc.gov.uk/esc/esc.htm