Elderly facing tax may have cause for appeal

Elderly taxpayers are being hunted down by HM Revenue & Customs in a bid to recover tax losses caused by its own mistakes.

Some pensioners are facing large tax bills which are due by the end of the month under the self-assessment rules.

Volunteer organisation Low Income Tax Reform Group chairman John Andrews said: “A high proportion of tax demands are going out to pensioners and those on incapacity benefit. By definition, those on low incomes are less likely to have tax agents acting for them because they cannot afford it, so their tax is more likely to be wrong.”

There is also some evidence that these new tax demands are incorrect.

Carol Pavely, from the charity Tax Help for Older People said people who complained were merely getting standard replies, and she was not pleased about the way HMRC is dealing with the matter. “This reconciliation was supposed to put things right, but it appears HMRC is still making mistakes,” she said.

Last week HMRC said it was going to act on a further 450,000 cases from the 2007-8 tax year. Elaine Clark of tax firm Cheap Accounting said: “They failed to act on the information and allowed more than two years to elapse. In that case, taxpayers can claim exceptional circumstances.”

An HMRC clause, Extra Statutory Concession A19 may allow appeal. It says that if taxpayers had believed their tax code to be correct and HMRC had all the information required, but failed to take action, the tax demand should be written off.

HMRC said: “The ESC A19 concession requires the customer to have a reasonable belief their tax affairs are in order … The fundamental point remains that people can’t devolve all responsibility for their tax situations to HMRC.”

More than 20,000 people have appealed to date, with more than 6,000 successes. Indeed, 250,000 tax bills have been written off where HMRC failed to tax the state pension correctly.

See websites www.litrg.org.uk and www.taxvol.org.uk for further information.

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