Failure to act on information given in 2008
14. Before we decide if we should investigate a complaint in more detail, we look at whether there are signs the organisation has got something wrong. We do this by comparing what should have happened with what did happen. We have done this and have not found any signs something has gone wrong.
15. We recognise tax can be a complicated area and tax codes can be tricky to understand. But it is the individual’s responsibility to check their tax code to make sure it is correct. This means Mrs R should have contacted HMRC to make sure she was correctly coded once her Carer’s Allowance stopped.
16. Mrs R says she recalls speaking to HMRC about her new job in 2008 and that she was no longer entitled to Carer’s Allowance because of it. HMRC says it has no record of this communication.
17. Given the length of time that has passed, it is not reasonable to expect Mrs R to be able to provide evidence of the phone call she refers to. Likewise, HMRC does not retain recordings for this long, which is to be expected, in accordance with the General Data Protection Regulation (GDPR).
18. We have considered the evidence and information that is available to us to decide how likely it is that Mrs R contacted HMRC about this change in 2008.
19. Mrs R evidently called the Department for Work and Pensions (DWP) because it stopped paying her the Carer’s Allowance benefit. DWP does not have to tell HMRC about changes – it is the taxpayer’s responsibility to notify HMRC directly. This is not the same as notifying HMRC of earnings for the year, which it seems Mrs R did.
20. HMRC makes notes about the nature and format of all the contact it receives as it happens or very shortly afterwards (contemporaneous records). Additionally, any time an account is accessed, a digital ‘footprint’ is left. HMRC would have needed to have accessed Mrs R’s account to be able to confirm her identity and deal with adjusting her tax code to reflect the loss of benefit. There is, according to the AO’s report, nothing to show the account was accessed. We therefore consider it is likely Mrs R only contacted DWP about her Carer’s Allowance and not HMRC.
21. We next considered whether Mrs R could have contacted HMRC sooner than 2021. There was information available to Mrs R throughout this period she was overpaying tax to show some state benefit or pension was reflected within her tax coding. This was shown on the coding notices HMRC sent her and referred to either ‘state pension’, ‘state benefit’ or ‘state pension/state benefits’. Mrs R is not of pensionable age and was not in receipt of any other taxable benefit. Therefore, it ought reasonably to have alerted her that there might be a problem with her tax code.
22. Mrs R says she was not aware the reference to pension or benefits related to the Carer’s Allowance. She explains she pays into a pension and was receiving some benefits and therefore assumed this was what her coding notice detailed. This was not the case and we have not seen anything to suggest Mrs R queried it with HMRC.
23. We understand Mrs R’s reasons for not raising the issue but, as regrettable as the outcome of this matter is for her, as a taxpayer she should check HMRC correspondence and make enquiries where needed to make sure she understands it. Unfortunately, there is no evidence she did this until 2021, and therefore we see no sign HMRC failed to act on information it was given.
Refunding the overpayment in full
24. Mrs R has received a rebate of the tax HMRC incorrectly claimed from her during the tax years 2017/18 to 2020/21 inclusive. She complains it has failed to refund the remaining nine years’ tax payments from 2008/09 to 2016/17 inclusive.
25. Section 43(1) of the Taxes Management Act 1970 limits a claim for refund to ‘four years after the end of the year of assessment to which it relates’. This means when Mrs R raised this issue with HMRC in 2021, she was entitled to receive refunds for the years from 2017/18 to 2020/21. HMRC provided this refund.
26. As the AO explained to Mrs R, HMRC has the discretion to accept late claims in some limited circumstances.
27. Extra-Statutory Concession B41 (ESC B41) states ‘repayments of tax will be made in respect of claims made outside the statutory time limit where an overpayment of tax has arisen because of an error by HMRC or another governmental department, and where there is no dispute or doubt as to the facts.’ This does not apply in this case. As unfortunate as the result of this is, HMRC did not make a mistake – it can only alter a tax code when it is told circumstances have changed. This only happened in 2021. Therefore, we are satisfied ESC B41 does not apply in this instance.
28. While we realise Mrs R has made a significant overpayment to HMRC because of this matter, she received information at the time to indicate it was happening. HMRC was not responsible for Mrs R’s delay in raising this issue with it and we have not seen that the delay arose as a result of HMRC’s error. HMRC acted in line with the applicable law and guidance when it did not provide a refund for the outstanding period in question.