Experts find PAYE error loophole


With the first batch of letters from the ‘HMRC tax code blunder’ now arriving at people’s doorsteps, experts claim that those who’ve underpaid may have a way to avoid repayments.

In total just under 6 million people have been affected by HMRC’s own mistake, and while the majority of those people will receive a nice rebate due to overpayment, 1.4 million will have underpaid and will be asked to cough up an average of £1,500 each.

However, experts suggest that there may be loopholes that will mean people found to have underpaid can avoid the repayments altogether.

If people gave all the correct details relating to their tax codes then it would have been up to HMRC to establish their own mistake and ask for the money back within 12 months after the tax year. If HRMC fail to do this then people can ask for the ESC A19, an extra-statutory concession. Since the earliest records of the error date back to April 2008 it seems that many people may be within their rights to evoke this clause.

Experts are now imploring people to check their records before blindly paying-up, Angela Beech, accountant at Blick Rothenberg, told The Telegraph: “Those who receive these demands need to think before they automatically pay up. If you had given HMRC information that would have enabled them to adjust your tax code to make sure that you did pay the right amount of tax, then, if the time limit has passed for them to use that information, they cannot pursue you for the unpaid tax.”

HMRC themselves have issued a statement regarding the potential loophole: “HMRC can consider writing off the underpayment in certain circumstances. Basically these are if HMRC had been provided with all the information necessary to get their tax right and the taxpayer could have reasonably expected their tax deductions to be right. In these circumstances they need to contact HMRC and ask for the underpayment to be reviewed on that basis.”