Extra statutory concession A19 (ESC A19) is available to taxpayers in certain situations where tax has not been correctly collected under PAYE and as a result the taxpayer has underpaid tax.
Broadly speaking the taxpayer is not required to pay the outstanding tax liablility where it can be shown that sufficient time has passed and HMRC had ‘relevant’ information to determine that the additional tax was due.
In determining what constitutes ‘relevant’ information for the purposes of ESC A19, HMRC guidance states that the end of year reconcilliations submitted by employers for each employee in a tax year (known as form P14), do not constitute relevant information.
However a recent freedom of information request by Keith Gordon (a barrister from Atlas Chambers) has discovered that HMRC’s guidance prior to well publicised errors with it’s system, found that P14’s were treated as relevant information (ESCapology, Taxation Issue 4376).
Despite the current assertion that P14s are not relevant information, Eaves & Co were recently able to successfully argue that a P14 did constitute relevant information which resulted in our client successfully having ESC A19 applied.
From speaking to other advisors this success may however be a one off as HMRC seem to be denying P14s as relevant information in most instances where ESC A19 is being sought.
The consulation for the revision of the conditions of ESC A19 has now closed with Eaves & Co submitting a response, in particular making a point for P14s to be included as relevant information. However we will wait and see the outcomes of this consultation and provide an update in due course.

Extra Statutory Concession  C16 has long been an extremely beneficial and straightforward way to deal with the tax implications of the striking off of a company.

Under the concession, Capital Gains Tax rather than Income tax, is payable and the cost of an expensive liquidation is avoided – as long as conditions are met.

However, a proposed amended law sets out the new condition that any payment at the time of the dissolution will be liable to income tax if it exceeds £4,000.

So  the favourable tax implications of ESC C16 are going to be heavily restricted. If you are conisdering striking off your company to release capital and assets it is better to do it sooner rather than later.

If you are considering potential liquidation of your company please get in touch for a no cost initial discussion.