Perseverance is the key, along with an evidential document trail (and a bit of knowledgeable outside help does not go amiss). I was in a similar situation in February last year; a situation partly engendered by HMRC lack of willingness to admit that their procedures were not joined up (we would probably call it incompetence), and partly by three geographically separated tax offices (mot only geographically, they just don't talk to one another.
Here are a couple of letters to Jessica Gorst-Williams of the Daily Telegraph personal finance section (Saturday DT), following a year of fruitless and frustrating correspondence with HMRC (they might look a bit lengthy, but stick with it, the result is worth it):
Dear Jessica
Underpaid Tax Refund Article – Jessica Investigates, DT 22 February 2014
I could almost use Peter Patton’s letter (Your Money, 22 February) as a template, so similar are our experiences dealing with HMRC. Could I therefore ask that you please give my case some consideration; I have attached a sheaf of what I hope is the relevant documentation to support my position.
In February 2013 I received a P800 demand for repayment of tax underpaid in TY 2009-10; the amount underpaid was stated as £4639.40, as the result of application of incorrect tax codes.
From the leading article on page one of Your Money, three conditions need to be met for HMRC to pursue recovery action; in reverse order:
The notification period of 12 months from the end of the tax year in question, 6 April 2010, was exceeded – the P800 demand was issued on 10 February 2013;
There existed a reasonable belief on my part that my tax affairs were in order as a salaried person subject to PAYE tax coding, and with no previous queries from HMRC during the preceding 12 years’ employment with the same employer;
HMRC had sufficient information on an ongoing basis of income information from my employer to enable implementation of the appropriate tax code – this was identified by HMRC themselves by issue of a tax coding notice on 1 March 2010 to my employer to use Code D0 for the remainder of TY 2009-10. Additionally, they had also issued a D0 notice of coding on 10 January 2010 for TY 2010-11. There were many other contradictory notices of coding that reinforce your observation that the nuances of the tax codes are not necessarily familiar to lay people, which most of us are.
I contested the claim for repayment of underpaid tax (6 March 2013), generating a non-virtuous circle of correspondence restating my and HMRC’s relative positions and assertions. This culminated in instigation of the HMRC complaints procedure (4 September 2013), which resulted in a lengthy and convoluted reply and. to me, largely incomprehensible logic. A further HMRC P800 claim dated 27 August 2013 also slipped in the underpaid tax from 2009-10 as an underpayment in TY 2012-13, this time with a small adjustment down of the sum owed to £4223.66.
I admit at this stage that I could see no way of breaking the circle of counter-claims, and given that I was on a slow upward recovery slope from three operations in December 2012 to remove bowel cancer, along with 6 months subsequent chemotherapy, beginning in March 2013, I had somewhat lost the impetus to continue flogging a dead horse. I therefore acquiesced and arranged for the longest period of recovery (of my money) to be instigated with effect from 1 January 2014.
However, I am pleased to report that I am now well on the way to a full recovery, and reinvigorated by your article on the potential to reverse the HMRC position. I do hope that you are able to exert your expertise on HMRC to the same effect as you have recently for other readers.
Dear Jessica
Underpaid Tax Refund Article – Jessica Investigates, DT 22 February 2014
I am pleased to report that HMRC have responded favourably to whatever arguments you presented to them.
I replied today to a telephone message (28 March – HMRC Complaints Office) and was informed by HMRC that my case has been reviewed, resulting in the application of Extra Statutory Concession ESC A19 annulling the P800 claim for £4639.40. I received a cheque from HMRC yesterday refunding the three monthly payments already made, and was told that the standing order for further payments has been cancelled. In addition, HMRC will send me a cheque for £150 in acknowledgement of the stress and anxiety that their actions have caused. A detailed letter is on the way from HMRC; I can send you a copy (or synopsis) if it helps round off the sequence of actions.
I would like to express my sincere thanks to you for taking up my cause to such good effect; I really am most grateful for your successful intervention.
It can be done
Mister B