Currently, the Extra Statutory Concession, A19, allows underpaid tax to be cancelled if taxpayers had reasonable belief they had paid the right amount.
However, under new proposals, HMRC plan to re-write the controversial rule which has let over 40,000 taxpayers in the past year have income tax and National Insurance underpayments – worth an estimated £54 million – written off.
It has been suggested that the majority of underpayments are as a result of a wrong tax code – normally because someone has changed jobs or started taking a pension.
Moving forward, HMRC want to impose stiffer tests on taxpayers, which will make them responsible for checking their own tax code and for notifying the taxman of any changes in their circumstances.
Under the proposals, if taxpayers have not made the appropriate checks, they will not be able to apply to have shock tax bills cancelled.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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