Has anyone else experienced something like this?

I've been living full-time in Thailand since 2004 and both HMRC and DWP are fully informed so I am not tax resident in the UK and my state pension is frozen. All correct.

I started taking my occupational and private UK pensions 9 or 10 years ago when I got to 59 or 60. As I'd mostly worked overseas, these were small and I was able to manipulate the amount paid every year to keep it below the tax-free allowance, currently £12,570, so I haven't paid any UK income tax in over 20 years. Then three years ago, when I hit 66, I became eligible for the UK state pension, I'd paid quite a lot of money to buy extra qualifying years while I've been retired in Thailand. That amounts to around nine grand a year and puts my total UK pension income at well over £20K/year.

I knew that DWP informs HMRC when they start paying you the state pension, so I assumed there was nothing for me to do. Eventually, HMRC would issue a new tax code and take whatever money they decided they were owed. I also knew that HMRC are not famous for rapid customer response, so I didn't worry when they didn't change anything for the first year after I started getting the state pension, but after almost two years it seemed to be taking a bit long.

I have a good advisor on this as my older brother was a tax inspector and assistant director of HMRC in his working days, and his best friend these days was also a tax inspector for many years. They told me I needed to inform HMRC before the end of the tax year to avoid a penalty, which I did by registered letter. Two of them, in fact, just to be certain. I also ticked the box on the Government Gateway opting in to e-mail notifications of messages rather than snail mail.

Another year has now passed and nothing at all has changed, the GG says my tax is all up to date and correct, and not a penny has been deducted from my pensions since the state pension pushed me way above the £12,570 tax free limit. My tax advisors have various ideas, from making an official complaint to invoking Extra Statutory Concession A19. As far as I'm aware, they're probably correct, but I just want to ask if anyone else has had a situation like this? One possibility, for example is that with CRS theoretically in force here for the last few years, maybe HMRC are assuming I'm paying Thai tax on all my income so are not asking for any more to avoid the double taxation problem? Unlikely, I know, but not impossible. Is there any other reason you can think of why HMRC should be failing to collect the pound of flesh that I presumably owe them?

Thanks for any experience or insights.

You might be the only person in the world to ever have done this, but I think you should raise an official complaint that you are not paying enough tax! Seriously though, an official complaint has to be answered within a certain time limit.

I just wonder whether HMRC may have already been surreptitiously collecting the tax you say you owe them through your tax code. Have you noticed any changes in this since you started receiving the State Pension?

Edited May 18May 18 by OJAS

6 hours ago, Guderian said:

I just want to ask if anyone else has had a situation like this?

Yes.

I had been receiving my UK state pension for almost 1 year before I realised that I had not been paying any extra income tax. My occupational pension was already above the GBP12,570 allowance, so I was expecting my tax code to show that HMRC were taking 20% of my state pension in tax.

I wrote to HMRC and waited until the next tax year to see if my tax code was changed to recoup the tax I now owed. It wasn't.

I phoned HMRC and explained the situation. They blamed DWP for not informing them. I phoned DWP who told me that HMRC had been informed.

In fact, I made several calls and sent letters to HMRC and DWP during the following year. In addition I used my Government Gateway account to try and get the situation resolved.

Eventually, I was told the amount of tax owed for the first year (part of the tax year) which came to about GBP1,400, which I decided to pay by bank transfer.

The new tax year arrived and my tax code was still unchanged at 1257 (12,570 allowance). More phone calls and letters until it was eventually corrected.

By this time I now owed about GBP1,200, which has now being collected at an extra GBP100 per month by means of a new tax code.

So, almost 2 years to get things sorted with HMRC.

14 hours ago, lungbing said:

You might be the only person in the world to ever have done this, but I think you should raise an official complaint that you are not paying enough tax! Seriously though, an official complaint has to be answered within a certain time limit.

The official complaint is my brother's idea, the one who was an assistant director of HMRC. He's concerned that they may impose a penalty for the first year since I didn't tell them I was receiving the state pension and I owed them about £1,600. For the second year the letters we sent reached them before the end of the tax year so they cannot impose a penalty. He's now concerned that they will also want interest paid as well as the back tax if and when they ever get around to dealing with it. These things quickly mount up into a sizeable sum. As you say, if the official complaint has to be answered within a certain time frame then it sounds like a better option than trying to spend hours trying to phone them and ending up listening to Vivaldi!

11 hours ago, OJAS said:

I just wonder whether HMRC may have already been surreptitiously collecting the tax you say you owe them through your tax code. Have you noticed any changes in this since you started receiving the State Pension?

No. On two occasions in the last 20 years they adjusted the tax code on one of my bank accounts for no reason at all so I was paying tax. I called them on both occasions and they immediately fixed it. I haven't paid a penny in income tax since 2004.

Edited May 19May 19 by Guderian

Complaining to HMRC is the way to go. Do it online via your Gateway account.

https://www.gov.uk/find-hmrc-contacts/make-a-complaint-about-hmrc

I've recently had a positive result from a complaint I originally made in February 25 and resurrected in February 26 when I found out that what they said would happen for tax year 26/27 didn't happen. All communication was via e-mail and responses were relatively quick, sometimes a matter of days.

Also got £75 from HMRC out of it.

10 hours ago, chickenslegs said:

Yes.

I had been receiving my UK state pension for almost 1 year before I realised that I had not been paying any extra income tax. My occupational pension was already above the GBP12,570 allowance, so I was expecting my tax code to show that HMRC were taking 20% of my state pension in tax.

I wrote to HMRC and waited until the next tax year to see if my tax code was changed to recoup the tax I now owed. It wasn't.

I phoned HMRC and explained the situation. They blamed DWP for not informing them. I phoned DWP who told me that HMRC had been informed.

In fact, I made several calls and sent letters to HMRC and DWP during the following year. In addition I used my Government Gateway account to try and get the situation resolved.

Eventually, I was told the amount of tax owed for the first year (part of the tax year) which came to about GBP1,400, which I decided to pay by bank transfer.

The new tax year arrived and my tax code was still unchanged at 1257 (12,570 allowance). More phone calls and letters until it was eventually corrected.

By this time I now owed about GBP1,200, which has now being collected at an extra GBP100 per month by means of a new tax code.

So, almost 2 years to get things sorted with HMRC.

Thanks for the detailed reply, it sounds like general incompetence at work in both HMRC and DWP. Of course, the way they see it it will be our fault rather than theirs. Did they impose any penalties or charge you interest on what was owing?

I'm not honestly sure I've got the patience to sit for hours trying to get through to HMRC to sort out a mess that they should have fixed themselves a long time ago. I now seem to have four options:

1. As mentioned above by lungbing, an official complaint has to be answered within a certain period of time, so it would be one way to force the issue, though possibly a bit of a battering ram.

2. Then his friend's idea is to use ESC A19 to force them to write off the tax owed, which sounds like it would be a good plan and should apply to the second and third years but perhaps not to the first one. I suspect that very few people will know about ESC A19, but this is the summary from Google:

3. Then I also have the possibility of calling the tax code people and trying to get them to handle it, but in some ways that would be rewarding their incompetence.

4. The final option is to just do an ostrich impression, ignore it all and hope they never bother chasing it up, but I'd prefer to get it done and dusted to be honest.

Thanks for the info, that's very useful indeed.

2 minutes ago, MartinL said:

Complaining to HMRC is the way to go. Do it online via your Gateway account.

https://www.gov.uk/find-hmrc-contacts/make-a-complaint-about-hmrc

I've recently had a positive result from a complaint I originally made in February 25 and resurrected in February 26 when I found out that what they said would happen for tax year 26/27 didn't happen. All communication was via e-mail and responses were relatively quick, sometimes a matter of days.

Also got £75 from HMRC out of it.

Thanks. I must admit that I don't find the GG terribly informative, probably because for decades my tax situation has been more or less non-existent. It just tells me that my tax is up to date and correct, which is wrong, of course. I haven't noticed the complaint option, I'll mention that to my brother, but I don't think he's ever bothered creating a GG account so probably won't know about it. It may be an easier way to make an official complaint that what he has in mind, which will no doubt involve doing things the old way via registered letters (he retired way back in 2010).

This is what Google tells me:

Did your second complaint get moved up to Tier 2 or were you always at Tier1, or was it unclear?

Thanks for the info, that's also really useful to know.

36 minutes ago, Guderian said:

Thanks. I must admit that I don't find the GG terribly informative, probably because for decades my tax situation has been more or less non-existent. It just tells me that my tax is up to date and correct, which is wrong, of course. I haven't noticed the complaint option, I'll mention that to my brother, but I don't think he's ever bothered creating a GG account so probably won't know about it. It may be an easier way to make an official complaint that what he has in mind, which will no doubt involve doing things the old way via registered letters (he retired way back in 2010).

Did your second complaint get moved up to Tier 2 or were you always at Tier1, or was it unclear?

Thanks for the info, that's also really useful to know.

Make the complaint yourself, no need to go through your brother - it just adds an extra component to the chain of communication. Just explain the facts and events clearly and say what outcome you'd like to see, e.g. I'd like a clear answer on tax owed by me or tax repayable to me and an assurance that tax codes will be correctly updated as necessary in future. If you know your tax-free allowance (£12,570) and your pension income (assuming you have no complications like rental, dividend, capital gains etc. income), working out your correct HMRC tax code is simple.

Complaints only get raised to Tier 2 if you ask for that to happen and the communications make it clear you can do that at any time but you must use a specific phrase - ‘I want to raise this complaint to Tier 2’. Yes, I asked for my complaint to go to T2 after the T1 official made a cock-up.

EDIT - in an earlier post you said " ... an official complaint ... would be one way to force the issue, though possibly a bit of a battering ram". Don't worry about the 'battering ram' effect. If the boot was on the other foot, they wouldn't hesitate to use the battering ram on you!

Edited May 19May 19 by MartinL

14 minutes ago, MartinL said:

Make the complaint yourself, no need to go through your brother - it just adds an extra component to the chain of communication. Just explain the facts and events clearly and say what outcome you'd like to see, e.g. I'd like a clear answer on tax owed by me or tax repayable to me and an assurance that tax codes will be correctly updated as necessary in future. If you know your tax-free allowance (£12,570) and your pension income (assuming you have no complications like rental, dividend, capital gains etc. income), working out your correct HMRC tax code is simple.

Complaints only get raised to Tier 2 if you ask for that to happen and the communications make it clear you can do that at any time but you must use a specific phrase - ‘I want to raise this complaint to Tier 2’. Yes, I asked for my complaint to go to T2 after the T1 official made a cock-up.

EDIT - in an earlier post you said " ... an official complaint ... would be one way to force the issue, though possibly a bit of a battering ram". Don't worry about the 'battering ram' effect. If the boot was on the other foot, they wouldn't hesitate to use the battering ram on you!

Thanks for the thoughts. Yes. I'd make the complaint myself but, given my brother's deep knowledge of how HMRC thinks (or at least how it did over 15 years ago), I'll certainly listen to his advice and run a draft past him and his friend.

I saw the bit about telling them what outcome you'd like. Well, it would be for the tax owed over the last three years to be written off and for them to sort out my tax code once and for all and then I could start paying them what I owe. I don't honestly see that happening via a complaint, though, which is why invoking ESC A19 is perhaps a better option. That's where the expert (if somewhat outdated) views of my brother and his friend will be useful, in deciding which approach will sort matters out most effectively from my standpoint.

Compaints to HMRC - I made a complaint last year, largely because I could find no other way to contact HMRC by email to describe my issue.

A short time later I received an email to say that the complaint had been addressed and my issue was resolved. (They owed me money and payment had not been made prior to my complaint.)

However, the message also declared that they had done an investigation on my previous tax filings, searching for errors. This strikes me as a vindictive device that I guess is used as a deterrent for any future thoughts of complaint.