Our very own Andrew Rainford has been published into the Practical Tax Newsletter for June and September. In the June addition he has helpfully recounted a success story concerning ‘reasonable belief’ for ESC A19.
Reasonable belief requirement, in terms of the extra statutory concession A19, refers to HMRC using the proof of ‘reasonable belief’ clause to negate ‘writing off’ tax if HMRC failed to make timely use of their information that tax was required to be payed.
According to the extra statutory concession tax can be ‘written off’ if HMRC failed to notify the taxpayer that extra tax was due to be payed within 12 months from the end of the tax year. If the taxpayer believed their tax was in order and did not receive any notification of any arrears they are applicable from the extra statutory concession.
It is obvious and acceptable that there should be some provision in this to prevent fraud such as persons knowingly concealing income or benefits that HMRC did not discover to be in error within the required time period. This is the reason for the ‘reasonable belief’ clause. A taxpayer must demonstrate that they believed their tax was in order and this belief is based on reasonable evidence.
This clause has become a point of some controversy since the consequence of the reasonable belief clause is that HMRC has the power to sue subjective judgement on whether someone does indeed have ‘reasonable belief’ concerning their tax affairs. This puts the responsibility onto the taxpayer to offer proof of ‘reasonable belief’ which naturally will sometimes fall short of HMRC expectation of evidence.
Andrew Rainford recounts his experience in a successful campaign to have ESC A19 apply to a client.
“ESC A19 is an extremely powerful tool available to us (by HMRC no less) to question and query decisions which become bogged down in administrative arguments.”
