HM Revenue and Customs

4. Mr N complains HMRC incorrectly recorded his Starter Checklist for employment in September 2021, which caused significant tax underpayments for the years 2021-22, 2022-23 and 2023-24, and would not write these off under Extra-Statutory Concession A19 (ESC A19).

5. Mr N also says the Adjudicators Office (AO) decision relied on and contained incorrect information and guidance around ESC A19 and employer error.

6. Mr N says this led to years of tax underpayments and a considerable amount of money owing which he is being asked to pay back. He says this has caused considerable stress, anxiety and frustration due to the time spent trying to resolve the matter.

7. In bringing the complaint to us, Mr N would like HMRC to acknowledge the errors were theirs and for it to reconsider its decision.

8. In April 2021, HMRC set Mr N’s tax code to 1197L, and allocated his personal tax-free allowance to his primary employment at a transport company.

9. Mr N briefly started a secondary employment with another employer, which ended in August 2021.

10. In September, Mr N began employment with a new employer (1). The Starter Declaration information submitted to HMRC by his employer showed as ‘option B’. Employee statement B states, ‘since last 6 April I have had another job, but I do not have a P45. And/ or I have received payments from Jobseeker's Allowance, Employment and Support Allowance, or Incapacity Benefit’.

11. Due to the above HMRC ceased Mr N’s employment with the transport company and assigned the personal tax-free allowance to the new employer and issued tax codes at the end of September of 1037L.

12. Between September 2021 and April 2022, Mr N received duplicate personal allowances as he continued to work at the transport company while being paid under tax code 1197L.

13. In November 2022, Mr N ended his employment with employer (1) and began to work with a new employer (2). The Starter Declaration submitted to HMRC by his employer indicated ‘option C’, and employer (2) used tax code BR. Employee statement C states, ‘I have another job and/or I am in receipt of a State, workplace or private pension.’

14. Between April and November 2022, Mr N also continued to be paid by the transport company under tax code 1197L, despite that employment being ceased on HMRC systems. As the transport company was not recorded as live on HMRC systems, further duplicate personal allowances persisted.

15. In January 2023, HMRC reconciled the tax year 2021-22, and calculated Mr N had an underpayment of £1,131.74. It issued a Simple Assessment letter which notified Mr N of the underpayment for year 2021–22. In mid-September, it also issued a P800 to Mr N which again notified him of the underpayment.

16. The Simple Assessment letter is a tax calculation sent by HMRC that allows individuals with straightforward tax affairs to pay tax they owe without needing to fill out a full Self-Assessment tax return.

17. A P800 is an official tax calculation letter sent by HMRC. It shows whether you have paid the correct amount of tax through PAYE and details whether you are owed a tax refund or owe HMRC money.

18. In February 2023, Mr N phoned HMRC to ask about his 2021-22 underpayment. HMRC explained that he had received duplicate allowances across his employments with employer (1) and the transport company. Mr N called HMRC in mid-July, to set up a payment arrangement for his 2021-22 tax bill.

19. Between April and June 2023, Mr N’s employer (2) continued to operate tax code BR. In July, Mr N’s employer (1) sent HMRC a P11D form. It reviewed his tax code and updated his employer (2) as his primary employer and assigned tax code 1263L. The transport company continued to pay Mr N under tax code 1197L, which meant Mr N’s personal allowance continued to be duplicated from July until the end of the tax year.

20. In September, HMRC automatically reconciled the tax year 2022-23 and calculated a tax underpayment of £4,785.40. It sent Mr N a Simple Assessment calculation notifying him of the underpayment.

21. A few weeks later, Mr N completed HMRC’s online complaint form and highlighted this was the second consecutive year of underpayment due to incorrectly recorded information by HMRC.

22. In October, HMRC responded to Mr N’s complaint at tier 1. It explained how the underpayment occurred and advised for Mr N to check his current tax codes, as only one employer (2) was recorded on his account and for him to contact HMRC if there were discrepancies.

23. In September 2024, HMRC automatically reconciled the tax year 2023-24, and calculated that Mr N had underpaid tax by £5,625.40. This was caused by the duplication of Mr N’s personal allowance, and as he had not paid enough tax at the higher 40% rate. HMRC sent Mr N a PA302 Simple Assessment calculation, notifying him of the underpayment.

24. A week later, Mr N wrote to HMRC and requested that the underpayments for tax years 2022-23, and 2023-24 be reviewed under ESC A19.

25. ESC A19 is not an official tax return. It is a tool which allows HMRC to ‘give up’ the collection of tax in some circumstances if the debt was caused by HMRC’s own mistake or delay. The checklist is completed if you are an employee starting a new job without a P45, so your employer can work out the tax code to use on your first pay.

26. In mid-December, HMRC responded and explained that the Starter Declaration information submitted in September 2021, had caused the transport employment to be "ceased." It stated the underpayments did not meet the ESC A19 criteria and were recoverable.

27. HMRC also informed Mr N that it had corrected his tax record for the 2024-25 tax year, un-ceased his transport employment, issued a D0 tax code to that employer, and noted an estimated underpayment for 2024-25.

28. At the end of December 2024, Mr N wrote to HMRC and asked for a further review of his complaint.

29. In January 2025, HMRC automatically reviewed Mr N’s 2024-25 tax codes. It changed his primary employment to the transport company and his secondary employment to employer (2). Mr N called HMRC to query this and it provided an explanation of the revised tax codes.

30. At the beginning of April 2025, HMRC reviewed Mr N’s complaint and ESC A19 claim and wrote to Mr N to explain his employer (1) had sent the Starter Declaration ‘option B’ and this was the information it used.

31. A week later Mr N contacted his MP and requested they escalate the matter and asked for deductions to be removed from his tax code due to financial strain. In mid-May HMRC responded to his MP, not upholding the complaint and reiterated that ESC A19 did not apply to his underpayments.

32. Mr N complained to us in July.

Incorrectly recorded his Starter Checklist for employment

35. Mr N is unhappy that HMRC and the AO have denied HMRC made any mistake in relation to the tax underpayment for the years 2021-22, 2022-23 and 2023-24.

36. He says he told his new employer (1) in September 2021, that he had other employment and provided a Starter Checklist selecting ‘option C’. He believes either HMRC or his employer made a mistake by recording this as ‘option B’ and therefore should not be liable to pay the tax underpayment.

37. Our enquiries with HMRC have established that it received notification of Mr N’s new employment in September 2021, from employer (1) who submitted the Full Payment Submission (FPS) required, which stated Mr N ticked ‘option B’ on the Starter Checklist.

38. According to the HMRC Charter, it expects HMRC to keep and maintain accurate records, handle and process information properly and appropriately, and make fair and impartial decisions based on the facts rather than assumptions or bias.

39. HMRC accepted the FPS information as correct. Based on this it ceased recording the previously noted primary employment and treated the new source as Mr N’s only active income.

40. We can see HMRC updated the information as it was received and have seen no evidence to suggest HMRC acted incorrectly or would have had cause to doubt the information provided from Mr N’s employer.

41. Mr N has suggested his employer should be held accountable for the mistake.

42. The AO explained that the definition of ‘employer error’ is outlined in HMRC guidance and only applies in a very specific set of circumstances. Not all errors made by an employer meet the definition of ‘employer error’, considering HMRC’s definition and guidance. If the error does not meet the definition, the employer cannot be pursued for the payment of tax.

43. Under PAYE regulation, employers are liable to pay back any underpayments of tax that arise through their failure to use authorised tax codes. The AO correctly explains HMRC’s definition of ‘employer error’ does not include Starter Declarations.

44. We see that, in the absence of any prompt from Mr N or his employer, there was no requirement for HMRC to have acted sooner than it did regarding the information it received in September 2023.

45. We recognise that HMRC is required to process millions of taxpayer’s tax liabilities. Its policies reflect the practical limitations on its ability to manually monitor and check individuals tax affairs more frequently unless prompted by the taxpayer.

46. Based on the above, we find HMRC acted in line with its policies and procedures when handling the information that led to the underpayment. We have not identified any errors or maladministration by HMRC in this process.

47. We are unable to say whether the Starter Declaration form was submitted by Mr N to the employer incorrectly or if the employer submitted this incorrectly to HMRC. This is something that would need to be pursued directly with the relevant employer.

48. While we appreciate this is frustrating for Mr N, we will not be taking any further action on this part of the complaint.

Would not write tax off under ESC A19

49. Mr N also complains HMRC would not write off the underpayments in line with Extra-Statutory Concession A19 (ESC A19). While we appreciate Mr N’s frustration at an income tax underpayment occurring, the outcome he seeks (of having the sum collected by HMRC written off and reimbursed to him) would be dependent on certain specific conditions being met.

50. In lay terms this would be when the taxpayer had fulfilled all their statutory duties, and the underpayment only occurred because of maladministration on the part of HMRC.

51. As set out earlier in this statement HMRC and AO explained that ESC A19 did not apply in his case. There are specific criteria that must be met for it to apply, and it is limited in its scope. HMRC stated these criteria had not been met in Mr N’s case and therefore it could not be applied.

52. ESC A19 sets out that HMRC must write off the underpayment if: • it failed to make proper and timely use of information supplied by a taxpayer, an employer or the DWP • the taxpayer reasonably believed their tax affairs were correct • AND was notified of the arrears more than 12 months after the end of the tax year in which HMRC received the information indicating that more tax was due, • OR was notified of an over-repayment after the end of the tax year following the year in which the repayment was made.

53. In exceptional circumstances, arrears of tax notified 12 months or less after the end of the relevant tax year may be given up if HMRC:

• failed more than once to make proper use of the facts they had been given about one source of income, and • allowed the arrears to build up over two whole tax years in succession by failing to make proper and timely use of information they had been given.

54. These conditions must be met for HMRC to give up collection of a single year underpayment.

55. In Mr N’s case, the information needed to update his employment status correctly after it received the initial starter declaration in September 2021, was not received until September 2023, when Mr N queried his tax information. Up to this time HMRC was informed Mr N’s employer was his only one.

56. HMRC also contacted Mr N in September 2023 about the underpayment of tax for the 2022-2023 tax year, and September 2024 for the tax year 2023-24. This was well within the 12 months’ timeframes.

57. As there was no failure by HMRC to make use of information for the 2022-23 and 2023-24 tax years, and HMRC made Mr N aware of the underpayments within the specified timeframe, it appears HMRC’s application of ESC A19 was reasonable in this instance.

58. HMRC also wrote to Mr N in October 2023 and asked he check his active employments and contact them if it was incorrect. This was as their records showed only one (employer 2). Mr N did not follow this up with HMRC until September 2024.

59. For ESC A19 to apply for the period October 2023 to 3 April 2024, HMRC must have issued the tax calculation more than 12 months after the end of the 2023-24 tax year. As the calculation was issued before 6 April 2025 the concession cannot be applied.

60. Although Mr N did not meet the concession for the underpayments of tax to be given up, HMRC did agree to partially remit his tax bill by 20% as a gesture of good will for 2022-23 tax year for the period February and March. This was as it said it could have reviewed Mr N’s tax codes when he called in February 2023.

61. HMRC's public guidance also set out on the GOV.UK website ‘Tax Codes: Overview’ explicitly tells taxpayers to check their tax information and report errors. While this is regularly updated, the principles of the taxpayer’s role in ensuring correct taxation remain constant.

62. This information would also have been in place at the time of the events in question and easily obtained. We believe Mr N should have been aware of his statutory responsibilities in ensuring the right amount of tax would be paid to HMRC.

63. From what we have seen, we find HMRC has applied ESC A19 properly, and Mr N would not qualify for consideration to waive his underpaid tax under ESC A19.

64. We recognise this will be disappointing news to Mr N. In the absence of ESC A19 applying, HMRC are required to collect outstanding tax, and it does not have discretion to write off the underpaid amount. We have found no indications of maladministration in consideration of Mr N’s appeal over his tax debt.

65. This means we will not be taking any further action. We know Mr N continues to feel frustrated by the current position, so we hope we have clearly explained how we thought about everything available to us and reached our decision in this case.  We wish Mr N all the best for the future.

1. We have carefully considered Mr N’s complaint about HM Revenue and Customs (HMRC). We appreciate Mr N’s frustration at being informed he needed to settle a significant outstanding income tax bill sometime after he started his new employment.

2. While we can understand why Mr N feels the rules themselves may be unfair and have led to him being unfairly disadvantaged, we have seen no evidence of HMRC applying those rules incorrectly. So, we have not identified any indications of maladministration.

3. We will explain our decision in detail below. We hope this helps Mr N to understand our decision and give some reassurance about what happened.