New consultation issued on ESC A19

Tue, 10 Jul 2012 20:20:51 +0100

Where HMRC have failed or delayed to use information provided by the taxpayer, such as details of a change in income or details of a new or additional job, they can agree not to collect outstanding Income Tax from taxpayers where they have failed to use information received within 12 months after the end of the tax year in which it is received. This concession has benefited many taxpayers who have provided relevant information to HMRC which has not been promptly acted upon.

HMRC have recently issued a new consultation document to review the concession in order to:

Improve the clarity of the concession so that it is more user-friendly and easily understood by taxpayers.
Help HMRC bring greater objectivity to the process.
Help HMRC align the concession with the HMRC Charter and ensure that it continues to be available in appropriate cases.

HMRC is proposing that a stricter test is introduced. The concession currently allows tax to be written off if taxpayers had a 'reasonable belief' that they had paid the right amount. HMRC proposes to change the test to replace the 'reasonable belief' test with an objective test based around 'taxpayer responsibilities'. This would make taxpayers more responsible for notifying HMRC of a change in circumstances. The most common cause of underpayments relates to changes in a taxpayer's tax code usually as a result of a change in employment. The consultation is open for comments until 24 September 2012.