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Formerly known as 鈥極fficial Error鈥�, Extra Statutory Concession A19 allows us, as long as certain strict conditions are met, to give up income tax and capital gains tax where HMRC has failed to make proper or timely use of information. Although the concession does not expressly mention Class 4 NIC it should be considered in the same way as the associated income tax. The text of the concession is set out in the PAYE Manual at PAYE95005.

Interaction with SA

鈥楶rocess now, check later鈥� allows HMRC an enquiry window in which to correct mistakes, whether its own (for example, processing errors) or the taxpayer鈥檚. By the same token, the closure of the enquiry window gives the SA taxpayer a measure of statutory protection against belated tax demands. These factors, together with the greater responsibility placed on the taxpayer under SA, mean that ESC A19 will not normally apply in SA cases. However, you may come across a case where you feel that the concession should be given (or where the taxpayer claims it), particularly where the taxpayer is also within PAYE and 鈥榚xceptional circumstances鈥� apply. In such a case the principles to be followed are in the PAYE Manual at PAYE95000 onwards. In every case bear in mind that to qualify for remission of tax it must be reasonable for the taxpayer to have believed his or her tax affairs were in order.聽

Delay by HMRC in using information

Apart from 鈥榬easonable belief鈥�, the main qualifying condition is that we have notified arrears to the taxpayer more than 12 months after the end of the tax year in which we received the information that more tax was due. Where the return is the relevant information, this could happen only where there is a long delay between logging and capture but, in that situation, it is unlikely that the 鈥榬easonable belief鈥� test will be satisfied.

Keying errors

Keying errors are discussed and defined in business area 鈥楻eturns鈥�, section 鈥榁iew And Amend Return鈥�, subject 鈥楥orrecting Keying Errors Made鈥� (SAM124050) . There is no time limit for us to correct a keying error, but if we do so more that 12 months after the end of the tax year in which we received the return, then ESC A19 may have to be considered. However, in correcting the error we would simply be restoring the return on our records to its original state, as completed by the taxpayer. In most cases it would be difficult for the taxpayer to claim that it was reasonable for him to believe his affairs were in order while the return, as captured, differed from the version he had filed.

Liability already notified

SA liability that is suspended or removed from the taxpayer鈥檚 statement in error does not qualify for remission under ESC A19.

Over-repayment

General guidance on over-repayments in business area 鈥楻epayments鈥� distinguishes between repayments of 鈥榤oney鈥� and repayments of 鈥榯ax鈥�. Many over-repayments of 鈥榤oney鈥� will not qualify for remission under ESC A19 because they do not arise from a failure to make use of information concerning the customer鈥檚 tax affairs, for example, a payable order sent to the wrong person or a repayment of a sum exceeding the tax paid.

All other cases should be reviewed using the guidance in the PAYE Manual at PAYE95000 onwards.

Office records

Each processing office must keep a central record (previously an establishment file) entitled 鈥楬MRC Delay ESC A19鈥� to record for each case the tax given up or the over-repayment not recovered. Where possible the record should be electronic - guidance can be found on the BMoEI record retention site. The establishment file should contain three lists marked PR, PW and SA. Lists PR and PW are for non SA cases only. On list SA the following headings should be used

• Date
• Consecutive number
• UTR
• Taxpayer鈥檚 name
• NINO
• Year(s) - for cases involving more than one year show each year on a separate line with its own consecutive number
• Amount of tax given up each year
• Amount of Class 4 NIC given up each year
• Authorised and initials
• DR Reference (where appropriate)

The figure should be totalled annually at the end of each October and reported on LOMR (Office Level Data - Management Statistics) in the following December. Where more than one year鈥檚 tax or Class 4 NIC is given up in respect of the same customer, each year should be counted as a 鈥榗ase鈥� for LOMR purposes.

The procedure for non SA cases is set out at PAYE95105 - PAYE95110.

Procedures

If you decide that SA tax or Class 4 NIC should be given up under ESC A19 follow the procedure in the Action Guide.