PAYE95070 - Reconcile individual: HMRC delay: ESC A19: exceptional circumstances - repeated failures

Repeated failures

The reference to ‘one source of income’ in the exceptional circumstances part of the concession should be taken as meaning ‘one particular aspect of a person's tax affairs’. It includes repeated failures to act on the same piece of information, where a review of that information was part of our expected business process (that includes an annual coding review), as well as a single failure to act on each of several items about the same aspect. 

Cases where HMRC has failed more than once to make proper use of information can be easy to identify, for example if the taxpayer has repeatedly contacted HMRC to amend a code.

Further examples

• We receive P11d benefit information from an employer but fail to amend the tax code in the year we received the information
• We subsequently fail to amend the following years code at annual coding
• We have repeatedly failed to act on the same piece of information.

Where HMRC acknowledges the delay in amending the code, but still fails to do so, the taxpayer will be unlikely to pass the reasonable belief test - it is not reasonable for them to hold the belief that their tax affairs are in order when no change to the tax code and/or to the tax they pay has subsequently arisen.

However, this contrasts with the situation where HMRC reassures the taxpayer, possibly on more than one occasion that there is no need to amend a code and then, after the end of the tax year, calculates that the taxpayer is underpaid due to the failure to amend the tax code.

Any tax arrears given up due to tolerances remain arrears for purposes of ESC A19, even though a calculation may not have been sent.  We treat the calculation for the year as not being sent in a timely manner.  This is important when considering whether arrears have built up over two or more whole tax years.