PAYE95001 - Reconcile individual: HMRC delay: ESC A19: introduction and glossary of terms

HMRC has limited discretion under Extra Statutory Concession A19 (ESC A19) to give up collection of tax. If HMRC fail to make proper and timely use of information, and as a result, a taxpayer is faced with an unexpected tax bill (income tax, capital gains tax (CGT) or Class 4 NIC), we may decide not to collect these arrears under ESC A19.

Certain conditions have to be met before we apply discretion under ESC A19.  The full text of the concession is at PAYE95005.

Glossary of terms

  • Arrears - the unpaid tax (underpayment or over-repayment), capital gains or Class 4 NIC
  • Build-up of arrears - occurs where no action has been taken to stop the arrears continuing.  Arrears cease to build up when HMRC correct a tax code, send notification of an underpayment, process a Self Assessment (SA) return, or the arrears are paid
  • CY - the current tax year
  • CY-1 - the tax year prior to CY
  • CY-2 - the tax year prior to CY-1 and so on
  • Delay - notification of arrears more than 12 months after the end of the tax year, in which HMRC received the information indicating that more tax was due.  However, see 'Timely use of information' below
  • Expected Business process - HMRC's correct day to day running of PAYE, CGT or NIC
  • Give up - when HMRC applies ESC A19 and decides not to collect the arrears
  • Proper use of information - HMRC acting on information correctly.  For example, amending a tax code in line with our guidance
  • Relevant information - certain types of information indicating more tax is due.  This can be from the taxpayer/taxpayer's agent, employer/pension provider, DWP or institute representing the taxpayer (for example the taxpayer's bank when they send HMRC details of taxable interest).  The information must prompt a review in line with our expected business process and guidance for it to be considered
  • Relevant year - the tax year to which the arrears relate, the underpaid tax year
  • Taxpayer - the word ‘taxpayer’ (rather than ‘customer’) is used to accord with the wording in ESC A19 text
  • Timely use of information - means that arrears are notified 12 months or less after the end of the relevant tax year, irrespective of when the information was received.  Arrears notified within this time fall within HMRC's business processes and there has been no delay in asking for the tax due for the particular tax year

SA cases

Because of the statutory time limits for filing SA returns, and the greater responsibility placed on the taxpayer, ESC A19 does not normally apply. But on those occasions where it may be considered, the general principles in the following pages apply equally. SA background guidance is at SAM101120.