I don't agree at all that the tax was refunded erroneously, but I can't seem to make the taxman understand. Because I am about to undergo such a major change in finances, I just want to know what the worst case is, because he has already mentioned taking the money back through my tax code if we fail to agree at the meeting on Tuesday 20th.
However, I am interested to hear about this Official Error, or Revenue Delays in Using Information. I am/was a govt employee on PAYE with no other financial affairs that required a tax return (business, rental property etc).
In 2001/2 I was sent a self assessment form which I submitted and gained a small rebate (about Â£200), the following year this was randomly checked and all allowed.
In 2002/3 I was sent a self assessment form, and because my job location had changed I claimed for a fairly large business mileage rebate, the calculation for which and my reasons I clearly explained in the 'other info' box on the form. This rebate was paid (about Â£1500), and this return was not subject to an enquiry.
On that basis, in 2003/4 I made the same claim for business mileage, plus additional business expenses (about Â£3000). This 2003/4 claim is currently subject to an enquiry. I have accepted that the business travel claim for 2003/4 was not entirely valid (because of an interpretation of 'ordinary commuting') and have paid that rebate back on account. I tried to dispute that HMRC could reopen 2002/3 because it was more than 22 months since the end of that tax year. However, they said that because they could consider my 2003/4 claim to be (false/illegal/fraudulent, I forget the precise terminology but this was the gist), then they were able to go back this extra year. Therefore, I have repaid this money on account (approx Â£1500). If there is such a thing as an official error, I am wondering now if I should have done this, as I very clearly explained on the 2002/3 that I wasn't sure that my claim was correct, yet they allowed it.
Suffice to say, they have back on account about Â£3000, but I am still arguing that a further Â£1500 was paid out as a necessary part of my work and was 'wholly, necessarily and exclusively' etc. However, I gave them what I thought was incontrovertable evidence of this months ago, and they still keep wittering on about a Headmaster doing a history course and an articled clerk claiming exam fees, both of which cases I have read and neither are pertinent to my situation. I will be fully prepared to defend the final Â£1500, including a letter I now have from my employer saying I was employed to do this contested work (an educational course) and they should have paid for these things, but did not have the necessary systems in place etc. But knowing about 'Revenue delays in using information' might at least strengthen my arguement vis a vis the 2002/3 rebate they have on account.
Many thanks for your input.