PAYE underpayments caused by HMRC delay: ESC A19

Extra Statutory Concession (ESC) A19 allows certain liabilities in respect of Income Tax, Capital Gains Tax and National Insurance to be cancelled where the underpayment is caused by HMRC delays in using information. 

This is a freeview 'At a glance' guide to Extra Statutory Concession A19.

At a glance

An 'Extra Statutory Concession' (ESC) A19 covers the situation where HMRC delays in using information and this results in an underpayment of Income Tax, Capital Gains Tax or Class 4 National Insurance by an individual.

If HMRC should have already collected the tax due because the necessary information had already been provided to it but it failed or delayed to use this information, then it may agree not to collect the tax due.

• The circumstances are that HMRC should have used the information provided within 12 months after the end of the tax year in which it is received.
• In exceptional circumstances, arrears notified less than 12 months after the end of the relevant tax year may be considered where HMRC has persistently got something wrong year after year

What counts as information?

The list below shows information that HMRC would normally use to adjust a tax code:

• Details of a change in income.
• A new job or additional job.
• A taxable benefit provided by your employer, for example, a company car.
• Starting to receive a work or private pension.
• Receipt of state retirement, disability or widow’s pension.

This list is not exhaustive: each case will be considered based on its own set of circumstances. The information could have come from you, your employer, the Department for Work and Pensions.

Time limits

The time limit which applies for ESC A19 is where HMRC has failed to use information received within 12 months after the end of the tax year in which it is received.

For example: on 1 August 2020 HMRC received information about the commencement of a new pension in tax year 2020-21. This means that HMRC should have either issued a tax code or sent a tax calculation for the above receipt of information before 5 April 2022, which is 12 months after the last day of the tax year 2020-21.

For over-repayments, ESC A19 can apply where HMRC requests repayment of overpaid tax more than 12 months after the end of the tax year in which the repayment was made.

If no information has been received then ESC A19 cannot be considered.

Exceptional circumstances

In exceptional circumstances, arrears notified less than 12 months after the end of the relevant tax year may be considered where HMRC has persistently got something wrong year after year and both of the following apply:

• HMRC failed to make proper use of more than one piece of information received about a source of income.
• HMRC allowed tax arrears to build up over two whole tax years in succession, so at least two tax year underpayments are due.

Reasonable belief that your tax affairs were in order

HMRC will consider the facts and circumstances of any claim that this concession should apply and decide whether it was reasonable for you to believe prior to receiving the tax calculation that your tax affairs were in order.

Making a claim

If you think this concession applies to you, then you need to write to the address on your tax calculation as soon as possible indicating that you are making a claim under ‘ESC A19’. You will need to provide the following information:

• What tax year and underpayment the claim relates to.
• What information HMRC failed to make proper and timely use of and any supporting information.
• What date this information was provided.
• Reason(s) why you thought your tax affairs were in order prior to receiving the tax calculation

HMRC will consider your claim but may need to verify details with you before giving you their decision. You may wish to ask HMRC to suspend any action to collect the tax in the meantime.

Please note that there is no legal right of appeal but you can ask for another officer to review the decision made.

Useful guides on this topic

How to appeal an HMRC decision
What type of decision can you appeal? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Grounds for Appeal: HMRC error or flaw
When can an error, mistake or procedural flaw made by HMRC provide a valid ground for making an appeal?

External link

HMRC guidance: If HMRC did not act on information they were given