In a ruling which underlines the pitfalls of the PAYE system, a tribunal has expressed sympathy for a worker who says that he was issued with a substantial retrospective tax demand due to a calculation error by tax officials. However, the first-tier tribunal ruled that it had no power to direct Her Majesty’s Revenue and Customs (HMRC) to waive the bill although it had placed the taxpayer in financial difficulties.
The man was in an unusually complex position as he had two separate sources of employment. HMRC issued him with a demand for £2,615.96 arguing that tax had been underpaid through the PAYE system. The taxpayer accepted that that sum was due but asked HMRC to waive the bill under the terms of extra-statutory concession A19 (ESC A19) on the basis that an official error had been made.
In dismissing the taxpayer’s appeal, the tribunal ruled that it had no jurisdiction to give a ruling on the proper application of ESC A19. Even if the taxpayer could show that he had a reasonable expectation that the demand would not be enforced, the tribunal had no power to give effect to that.
The tribunal acknowledged that the operation of the PAYE system in cases where workers have multiple sources of employment is ‘by no means straightforward’ and expressed sympathy to the taxpayer for the hardship and inconvenience that he had endured.