Like many other practitioners I have recently found that HMRC have delayed, or refused, applications for official error.
This is due to the fact that cases where there were common failings by HMRC – notably arising from the new computer which trawled through the system and identified cases going back for a number of years where HMRC had failed to pick up either benefits in kind or multiple employments, and the resulting failure to make adequate coding adjustments resulted in tax underpayments.
Setting aside the technical arguments by the first tier tribunal, HMRC have been consulting on the revision to the extra statutory concession that we have used in the past to cancel debts arising from official error.
Notably, HMRC wishes to introduce the concept of taxpayers’ responsibilities – which basically means that if you as an individual are aware of a change in your personal circumstances which impacts on your tax position the obligation is yours to report this to HMRC.
Also, they propose to remove any reference to capital gains tax and official error – this is because the requirement is upon the individual to voluntarily disclose capital gains tax under the self assessment legislation and consequently this nullifies the extra statutory concession in its entirety.
It should be noted that in future HMRC propose that the concession will remove any reference to the taxpayer having a reasonable belief that their affairs are in order. The reasonable belief test will be replaced by an HMRC expectation that taxpayers have a basic level of knowledge about their own tax affairs.
What is interesting and what will affect a number of the cases that I currently have under review, and which may apply to the reader is that HMRC are now prepared to accept that the provision of a P14 (end of year documentation supplied by the employer to HMRC) amounts to sufficient notification to HMRC of an individual’s employment income and tax deducted therefrom. It may well be that readers may have had official error claims rejected or put on hold pending a decision by the first tier tribunal. I personally feel that the P14 is legitimate evidence, HMRC having acknowledged in the proposed revision to extra statutory concession A19 will mean that cases that have been rejected or are still on hold, should now be able to pursue that line of argument.
If you have received an unexpected tax demand and would like this to be reviewed, please contact me on 0161 886 8060 or by email firstname.lastname@example.org