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TAXATION AND TRUSTS

More than 10.2 million filed their self-assessment tax return by 31 January

(AF1, RO3)

According to a press release issued by HMRC, more than 10.2 million taxpayers filed their 2020/21 self-assessment tax return by the 31 January 2022 deadline.

31 January proved to be a popular day for filing, with more than 630,000 taxpayers filing on that day - the peak hour for filing was 16:00 to 16:59 when 52,475 completed their self-assessment return.

Overall, more than 12.2 million taxpayers were expected to file a self-assessment tax return this year. This means there are still around 2.3 million taxpayers that are expected to file. Provided they file by 28 February 2022 they won’t incur a late filing penalty. However, interest will be applied to outstanding balances from 1 February.

Taxpayers have until 1 April to pay their tax in full, or set up a time to pay arrangement, to avoid a late payment penalty.

Health and Social Care Levy - new guidance

(AF1, AF2, JO3, RO3)

This guidance is intended to help employers, the self-employed and employees prepare for the levy coming into effect on 6 April 2022. It is also relevant, from 6 April 2023, for self-employed people and employees above State Pension age.

The Health and Social Care Levy comes into effect in the UK (England, Scotland, Wales and Northern Ireland) on 6 April 2022.

For tax year 2022/23, Class 1, Class 1A, Class 1B and Class 4 National Insurance contributions will increase, for one year, by 1.25%. Employers, and employees and the self-employed (below the State Pension age), will pay the 1.25% increase.

From 6 April 2023, the National Insurance contribution rates will go back down to 2021/22 levels, and the levy will become a separate new tax of 1.25%. The 1.25% separate levy will apply to the same amounts for the following classes of National Insurance contributions:

• Class 1 that are above the primary and secondary thresholds;
• Class 1A and Class 1B for employers;
• Class 4 for the self-employed.

All existing National Insurance contribution reliefs will apply to the separate levy for:

• employees under the age of 21;
• apprentices under the age of 25;
• qualifying Freeport employees;
• those eligible for the Employment Allowance;
• armed forces veterans.

From 6 April 2023, the 1.25% levy will apply to employees above the State Pension age, earning more than the primary threshold (Class 1). The employer will deduct the levy using PAYE payroll. It will also apply to the self-employed who are above the State Pension age before 6 April 2022, with profits of more than the Lower Profits Limit. They must pay this using self-assessment.

The self-employed who reach State Pension age during the tax year 2022/23, with profits of more than the Lower Profit Limit, will pay the additional 1.25% throughout 2022/23 because they will continue paying Class 4 contributions until the end of the tax year in which they reach State Pension age.

Note that the 1.25% levy does not apply to Class 2 National Insurance (self-employed) contributions.

Full details of the 2022/23 National Insurance rates and thresholds can be found here.

These charges are intended to fund £12 billion a year to be spent on the NHS and social care across the UK. Like National Insurance, the Levy contributions will apply UK-wide. However, as Scotland, Wales and Northern Ireland have their own care funding systems, this National Insurance increase/the new Levy will be returned to the devolved nations via the usual allocation formulae.

IHT receipts rise some more

(AF1, JO2, RO3)

According to HMRC’s latest statistics, inheritance tax (IHT) receipts for April to December 2021 were just over £4.6 billion, which is £0.6 billion higher than in the same period a year earlier.

Monthly receipts:

The above chart contains the monthly receipts patterns in each tax year since 2017/18.

Back in March 2021, the Office for Budget Responsibility (OBR) projected 2021/22 IHT receipts to reach £6 billion. The OBR’s 27 October 2021 forecast (published alongside the 2021 Autumn Budget) kept the 2021/22 IHT receipts at this £6 billion figure, but posted the following increased forecasts for future years: £6.4 billion for 2022/23; £6.5 billion for 2023/24; £6.8 billion for 2024/25; £7.2 billion for 2025/26; and £7.6 billion for the following year, 2026/27.

However, with the IHT take for the first nine months of this tax year already at £4.6 billion, it’s possible that the final total for 2021/22 could be above the OBR’s £6 billion estimate. Both July and August 2021’s IHT receipts were already the highest monthly amounts received from the tax, at £571 million and £576 million respectively.

According to HMRC, higher receipts in October 2020, November 2020, and March to August 2021 are expected to be due to higher volumes of wealth transfers that took place during the COVID-19 pandemic, though HMRC says that it cannot verify this until full administrative data becomes available.

New FCA guidance for firms who seek to limit their liabilities

(AF1, RO3)

The FCA says it has seen an increase in the number of firms developing proposals, such as Scheme of Arrangements, to limit significant liabilities to consumers, in particular redress liabilities. 

In proposed guidance, published on 25 January, the FCA says it has made it clear that firms seeking to limit their liabilities should provide the best possible outcome for customers, which will include providing the maximum amount of funding possible to meet compensation claims by customers. Failure to do so could result in the FCA objecting to the firm’s proposals in court. The FCA will also use its regulatory powers, including enforcement actions for misconduct by firms or their senior managers, when appropriate.

The FCA has told firms it expects to be informed as soon as a firm is considering a Scheme of Arrangement, or other compromise, to manage liability and set out the information it should receive.  

Some firms have requested a ‘letter of non-objection’ from the FCA in relation to their proposal to manage their liabilities. This latest guidance consultation confirms that the FCA would be unlikely to ever issue a letter of non-objection. The FCA will instead focus on assessing each proposal on a case-by-case basis to ensure firms are meeting their regulatory obligations, including treating their customers fairly. Following their assessment, the FCA will communicate any concerns to firms, and, if necessary, the courts, and consider any further regulatory action.   

The proposed guidance focuses on three types of compromise: Schemes of Arrangement, Restructuring Plans and Creditors Voluntary Arrangements (CVAs). The FCA says that firms should review the proposed guidance before considering such compromises. The FCA says that the proposed guidance only relates to compromises in relation to liabilities and does not apply to Schemes of Arrangement or Restructuring Plans in other circumstances such as with-profits restructuring. Separate rules and guidance may apply to those types of restructurings and firms involved in such arrangements should consult their normal supervisory contact at the FCA and PRA as applicable.

Schemes of Arrangement and Restructuring Plans are court approved agreements between a company and its creditors and/or shareholders under the Companies Act 2006. Creditors vote on it and the court will sanction it. CVAs are governed by the Insolvency Act 1986; creditors will vote on it and the court is notified. There is no court hearing unless the CVA is challenged by a creditor or the FCA. 

The FCA is asking for views from all interested parties before its guidance is finalized. The consultation is open until 1 March 2022, after which the FCA will consider the feedback and publish its final guidance in due course.

House price growth makes a strong start to 2022

(AF1, RO3)

The latest Nationwide House Price Index shows that annual house price growth increased to 11.2% in January, from 10.4% in December, up 0.8% month-on-month. This is the strongest start to the year since 2005

Headlines	Jan-22	Dec-21
Monthly Index*	513.0	509.1
Monthly Change*	0.8%	1.1%
Annual Change	11.2%	10.4%
Average Price(not seasonally adjusted)	£255,556	£254,822

*Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated).

Mortgage approvals for house purchase have continued to run slightly above pre-pandemic levels, despite the surge in activity in 2021 as a result of the stamp duty holiday, which encouraged buyers to bring forward their transactions to avoid additional tax.

And the total number of property transactions in 2021 was the highest since 2007 and around 25% higher than in 2019, before the pandemic struck.

However, Robert Gardner, Nationwide's Chief Economist, believes it is likely that the housing market will slow this year, as house price growth has outstripped earnings growth by a wide margin since the pandemic struck and housing affordability has become less favourable:

“For example, a 10% deposit on a typical first-time buyer home is now equivalent to 56% of total gross annual earnings, a record high. Similarly, a typical mortgage payment as a share of take-home pay is now above the long run average, despite mortgage rates remaining close to all-time lows.

Reduced affordability is likely to exert a dampening impact on market activity and house price growth, especially since household finances are also coming under pressure from sharp increases in the cost of living.

High inflation and growing confidence that the Omicron variant will not derail the wider economic recovery has led to increased expectations that policymakers will increase interest rates further in the months ahead. This will further reduce housing affordability if it feeds through to higher mortgage rates, although to date a significant proportion of the rise in longer term interest rates seen in recent months has been absorbed by lenders.”

You can read the full Nationwide report here.

Comment

For those whose home is their prime asset, effective planning may be needed to reduce or provide for inheritance tax (IHT). The residence nil rate band (RNRB) will provide a solution for many married couples/civil partners with children, grandchildren or other lineal descendants. However, careful consideration should be given to its use in planning and the fact that it is reduced by £1 for every £2 where the deceased’s estate exceeds £2 million.

For those clients for whom the problem will remain, the answer may be provision for the liability through life assurance (joint lives last survivor for married couples/civil partners) in trust to those who will suffer because of the payment of the IHT. 

INVESTMENT PLANNING

Latest VCT stats show a small rise in investment for 2020/21

(AF4, FA7, LP2, RO2)

HMRC has issued VCT statistics showing the distribution of investors and amount of investment:

HMRC has issued its latest set of Venture Capital Trust (VCT) statistics. As the graph above shows, 2020/21 sales showed a small (3.6%) increase on the revised 2019/20 figure of £645m (originally £685m). The higher sum was raised across 40 trusts, three fewer than in 2019/20.

The statistics show the distribution of investment levels in VCTs over recent years. As we regularly remark, they do not quite comply with the 80/20 principle, but do show a large skew towards larger investors. The latest figures released for 2019/20 (which are not a full set as they only cover self-assessment claims) are shown in the table below shows:

Size of investment Upper limit£	Investors		Amount of investment
	No	% of total	Sum £m	% of total
1,000	1,585	8.9%	<5	0.1%
2,500	1,235	7.0%	<5	0.1%
5,000	1,770	10.0%	5	0.9%
10,000	3,110	17.5%	25	4.3%
15,000	1,475	8.3%	20	3.5%
20,000	1,645	9.3%	30	5.2%
25,000	1,065	6.0%	25	4.3%
50,000	2,855	16.1%	110	19.1%
75,000	870	4.9%	55	9.6%
100,000	800	4.5%	75	13.0%
150,000	430	2.4%	55	9.6%
200,000	885	5.0%	175	30.4%
TOTAL	19,130	100.0%	575	100.0%

Working backwards, 81.7% of the total raised by VCTs came from 39.0% of the investors – those investing more than £25,000. The biggest investors, those investing between £150,000 - £200,000, on average invested £198,000 and accounted 30.4% of total funds raised. All the figures are similar to those for 2018/19.

One feature which we have highlighted with this year’s graph is the steadily declining number of VCTs. In 2010/11, there were 128 VCTs in existence of which 78 raised fresh capital. By 2020/21, the corresponding figures were 57 and 40. Viewed another way, 70% of existing VCTs raised fresh capital in 2020/21. The shrinkage has several causes, including:

• Mergers have been common as the justification for multiple trusts with near identical investment policies has disappeared. For example, the offerings from Baronsmead have gone from five trusts to two.
• Some trusts have been wound up, sometimes because they are no longer able to raise fresh capital following VCT rule changes. The Ventus renewable energy VCTs are a current example of this.
• It is more cost efficient for sponsors to raise (and manage) capital via existing VCTs with established track records than to launch new VCTs. As VCTs have grown over the years, the issue of dilution caused by fresh investment has reduced. Larger average trust sizes also improves market liquidity.

Comment

The shrinking number of trusts has been exacerbated by a shrinking number of VCT managers as investment groups have merged.

Stock market performance: a wild January ride

January was a dramatic month for most global equity markets, with the notable exception of the UK

(AF4, FA7, LP2, RO2)

The beginning of 2022 had been a difficult time for equity markets. Now January has ended, it is time to have a quick look at how the first month of the year panned out:

• In major markets, the FTSE 100 (the top blue line) was almost an oasis of calm, eventually ending up 1.1% over the month. That has much to do with the Footsie’s constituents which are at the value end of the scale – financials and miners, for example. In contrast the FTSE 250 dropped by 6.5%, dragging the performance of the FTSE All-Share into negative territory (-0.4%).
• US markets were the most volatile, with both the NASDAQ and (on an intra-day basis) the S&P 500 entering correction territory (a fall off over 10% from the previous high). The end of the month saw a strong rally in both indices, but they nevertheless ended 9.0% and 5.3% down over January.
• The performance of the US had the inevitable effect on the MSCI AC World, Index which ended 4.1% down in sterling terms. Emerging markets held up better, with a sterling-based decline of 1%.
• While no major central bank moved its base rate in January, the US Federal Reserve said more than enough to lift global interest rates. UK 2 and10-year gilt yields rose by about 0.35%. The US 2-year yield jumped 0.44% (to 1.17%) as investors began to speculate whether there could really be seven base rate rises – one per Fed meeting – in the remainder of 2022 and if March might see a 0.5% jump to start off the climb. Although the European Central Bank reiterated its stance that any rate rise in 2022 is very unlikely, that did not stop German 10-year Bund yields moving up enough (0.19%) to end the month in positive territory, albeit only at 0.014%. 2-year yields, more indicative of short term expectations, rose by 0.11%.
• The rise in interest rates is being driven by inflation, which reached new highs in the USA (7.0%), UK (5.4%) and the Eurozone (5.0)% when the December data emerged. To add to the inflationary pain, Brent Crude rose nearly 15% over the month.

Comment

Volatility has returned to many markets and shows little sign of disappearing soon. This bout is one which has an unusual mix of ingredients: sharply rising inflation reaching multi-decade peaks, high equity market valuations, ultra-low interest rates and the probable end of a pandemic. It is hard to think of a time when all four occurred simultaneously…

PENSIONS

The impact of the change in State Pension Age from 65 to 66

(AF3, FA2, JO5, RO4, RO8)

The IFS has published research into the effect of the increase of the State Pension Age (SPA) from 65 to 66 on the labour market. As a reminder, the transition occurred between December 2018 and October 2020. The timing of the SPA change meant that employment data was clouded by the arrival of the pandemic. On the other hand, the timing of the IFS research fits perfectly with the launch of the Government’s second review of SPA (please see our earlier Bulletin on the announcement and a later Bulletin examining the impact of slowing mortality improvements).

The main findings drawn by the IFS were:

• Between Q3 2018 and Q2 2021 the employment rate of 65-year-old men by rose by nine percentage points to 42% and of 65-year-old women by 10 percentage points to 31%. As a result in 2021 there were 25,000 more men and 30,000 more women of this age in employment than would have been the case had the state pension age remained at 65.
• The 42% of 65-year-old men and 31% of 65-year-old women in paid work represented the highest rates since at least the mid 1970s. Over just two years, the increase in employment caused by the policy was of a similar magnitude to the gradual increase seen among 65-year-olds over the twelve years from 2005 to 2017.
• The increased employment was due to people staying in their existing job for longer, rather than to those in work changing employer or those not in paid work returning to the labour market. It was predominantly due to increases in full-time work rather than part-time work. For men it was disproportionately driven by the self-employed, while women working in the public sector were particularly likely to delay retirement due to the reform.
• People from more deprived local areas were more likely than those living in more prosperous areas to stay in employment. Significantly larger employment responses came from people with lower levels of education than from those with degree-level education. These results suggest that less advantaged people are more likely to continue to work because of a higher SPA.
• Those who delayed their retirement may partly have been doing so because they felt that they had to continue to work to maintain their standard of living. The IFS comments that delaying retirement may be difficult and disruptive for many, so the government should prioritise clear communication of changes to people’s state pension ages well in advance.
• Despite the employment effects of the reform, over 90% of the population did not change whether they were in paid work at age 65 as a direct result of the policy. Indeed, the majority (six in ten men and seven in ten women) have already left the workforce before age 65.
• IFS estimates that an additional 5,000 65-year-olds are unemployed and seeking work because of the SPA increase. 4% of women and 3% of men aged 65 reported that they are out of work for long-term health reasons (rather than being retired) because of the SPA change, an increase of over 25,000 people.

Comment

The IFS research shines a clarifying light on the broad employment data published by the ONS. These show that between September-November 2018 and September-November 2021 the employment rate for men aged 65+ fell from 14.4% to 13.4% while for women it rose from 7.6% to 8.3%.

WPC: Lack of guidance for pension savers risks freedoms ‘failure’

(AF3, FA2, JO5, RO4, RO8)

The Work and Pensions Select Committee (WPC) has published the findings of its inquiry into accessing pension savings, which conclude that although the extra freedoms introduced in 2015 have on balance been a success, many savers need more guidance than they currently receive.

The report calls on the Government and regulators to play a more active role in supporting savers to make better decisions about their money and suggests that the Government should commit to a trial of automatic Pension Wise guidance appointments, with a target of at least 60% needed to increase the uptake of pensions guidance and advice.

The Work and Pensions Committee made recommendations in four areas:

1)	Options when accessing pensions Key recommendations include: Regulators should carry out a ‘scoping exercise’ on pension tax-free cash ‘decoupling’. The FCA should look to increase the number of people choosing a mixture of retirement products. The Government should continue to support the development of collective defined contribution (CDC) schemes.
2)	Supporting decision-making before accessing pension savings Key recommendations include: More clarity should be provided by the FCA on the advice/guidance boundary. The £500 pension advice allowance should be revisited. Government must be prepared to drop plans for a ‘pension statement season’ if the benefits cannot be demonstrated. A review of the ‘midlife MOT’ should be carried out to ensure it is working effectively.
3)	Pensions Dashboards Key recommendations include: Pensions Dashboards must be properly resourced to get implementation right and ensure data is accurate. No consideration should be given to allowing transactions through Dashboards until they are well established. The Money and Pensions Service (MAPS) should develop a guidance service to support savers by using the data available through Pensions Dashboards.
4)	Wider Government policy Key recommendations include: The Government should do everything possible to ensure that future changes to the pensions system do not bake in additional complexity. The DWP and Treasury should work together to monitor progress of the pension freedoms.

Commenting on the report, WPC Chair Stephen Timms said: “When the 2015 reforms were introduced the Government guaranteed that savers would be given the tools they needed to take advantage of the new range of options and make well-informed decisions. Seven years on, guidance remains the missing piece of the pension freedoms jigsaw. Nudging savers will not be enough. The Government and regulators can no longer just sit on their hands as decision making becomes ever more complicated. They must end their timidity and be much more active in supporting people as they approach retirement. We know that those who use Pension Wise find it useful and often make different choices as a result.  Every effort should be made to boost its use. Without intervention to drive up dramatically the numbers receiving advice and guidance, savers will make poor decisions — and, in far too many cases, become scam victims; and the pension freedoms, far from living up to their name, will instead trap people in an increasingly confusing web of complexity.”

The PLSA said that whilst the Committee’s proposals are a step in the right direction, it does not believe the increased reliance on guidance from Pension Wise will be sufficient to ensure savers get good outcomes. Nigel Peaple, Director of Policy and Advocacy at the PLSA, commented in their Press Release that: “We think Government should go one step further, and adopt the PLSA’s Guided Retirement Income Choices proposals, which will encourage the development of a vibrant market of blended solutions and a greater role for schemes in sign-posting or offering the right solutions.”

DWP publishes response to stronger nudge to pensions guidance

(AF3, FA2, JO5, RO4, RO8)

The DWP has published its response to the July 2021 consultation on draft regulations for delivering a stronger nudge to pensions guidance when individuals seek to access, or transfer for the purpose of accessing, their pension flexibilities applying to occupational pension schemes. The response confirms that:

• Savers will be nudged towards official guidance from Pension Wise.
• Proposals are designed to boost guidance take-up, with official figures suggesting that only around 1-in-7 people accessing their defined contribution (DC) pot take guidance before doing so.
• Reforms will require pension schemes to offer to book a guidance appointment on behalf of members.
• Savers who do not wish to receive guidance before accessing their pension can choose to opt-out.
• The DWP proposals only cover occupational pension schemes as the FCA has created different rules for other workplace pension schemes and retail pensions. There are differences in the two sets of rules, which will only cause confusion where individuals have benefits in both types of pension scheme.

Both the FCA and DWP rules take effect from 1 June 2022, although it is likely scheme administrators may start introducing them earlier so as to ease them in.

Recent Parliamentary pension related questions and answers - teachers, GMP and higher paid NHS staff

(AF3, FA2, JO5, RO4, RO8)

14 January 2022 – Teachers Pensions: written question - 104312

Question by Alec Shelbrooke

To ask the Secretary of State for Education, whether pension benefits that retired teachers are in receipt of will be protected, in a similar way that pension benefits of retired NHS workers have been since the start of the covid-19 outbreak, in the event that they return to work after being called upon by him in December 2021.

Response by Mt Robin Walker

Generally, retired teachers returning to the classroom following the recent call for ex-teachers to help will not be subject to potential abatement of their teachers’ pension. This is because it is expected that they will be employed by supply teacher agencies, which tend not to be participating Teacher Pensions’ Scheme (TPS) employers.

TPS abatement rules would currently apply to retired teachers, with a final salary pension, if they were to be employed directly by a participating TPS employer. However, the call for ex-teachers to help in the classroom is expected to involve short-term and/or part-time appointments. Consequently, the amount of earnings involved is unlikely to result in any adjustment to individuals’ pension benefits on account of abatement.

We do not, therefore, anticipate there being a compelling need to suspend the abatement provisions in the way that the NHS has done to facilitate the longer-term re-employment of key staff. However, the department is monitoring the situation and, if needed, we will review the policy position.

17 January 2022 – GMP: written question - 105784

Question by Kim Leadbeater

To ask the Secretary of State for Work and Pensions, for what reason the start date for GMP equalisation is 17 May 1990; and what comparative assessment she has made of the potential merits of that start date being (a) 17 May 1990 and (b) the 1986 date of the UK’s ratification of The Convention on the Elimination of All Forms of Discrimination against Women.

Response by Guy Opperman

The date relates to the court case that determines this matter. On 17 May 1990, the European Court of Justice ruled in the Barber Judgment that private occupational pensions constituted ‘deferred pay’ and were therefore subject to Article 119 of the EEC Treaty (now in Article 157 of the Treaty on the Functioning of the EU). This means that these pensions are subject to the provisions of Article 157 on equal treatment between men and women. While the Barber Judgment was not specifically about Guaranteed Minimum Pensions, it meant that the impact of the different Guaranteed Minimum Pension rules for men and women have to be corrected.

The Court restricted the application of the Barber judgment so that it would not have effect prior to 17 May 1990, except in very limited circumstances concerning litigation existing at that time.

20 January 2022 – NHS pensions: written question - 108525

Question by Anne Marie Morris

To ask the Secretary of State for Health and Social Care, if he will make an assessment of the potential merits of a pension scheme for higher paid NHS staff that is similar to the Judicial Pensions Scheme 2022.

Response by Edward Argar

The NHS Pension Scheme provides generous retirement benefits for staff and for the vast majority of members their pension savings are tax free.

The unique circumstances of judiciary appointments mean that it is necessary to reform their pension arrangements. Judges are not able to work in private practice after taking up office and many judges have a significant decrease in pay to join the judiciary. The Government is therefore committed to introducing a reformed judicial pension scheme. Such a scheme would not benefit the vast majority of National Health Service staff, as members would receive no tax relief on their contributions.

PAC: “Shameful shambles” of DWP’s long term underpayment of state pensioners with “little interest” in full consequences

(AF3, FA2, JO5, RO4, RO8)

The Parliamentary Public Accounts Committee (PAC) into the state of affairs within the DWP that resulted in thousands of women being underpaid their State Pension. With the errors dating back as far as 1985 it is estimated as many as 134,000 pensioners, mostly women, have missed out on over £1 billion in state pension income. Whilst the DWP is now undergoing a restitution exercise, tens of thousands of those affected tragically died before being repaid. The National Audit Office (NAO) has previously estimated those affected are owed £8,900 each on average in compensation.

The PAC report highlights the DWP’s use of outdated systems and heavy reliance on manual processing, coupled, in the report’s view, with complacency in monitoring errors and a quality assurance framework that is not fit for purpose.  The report also highlights:

• The administrative cost of trying to put things right and the risk of mistakes being made during the correction exercise
• Delays and potential for errors in putting new State Pension entitlements into payment due to experienced staff having been moved away from “business-as usual” applications to work on the corrections

The PAC recommends that “as a matter of urgency, the DWP should consider whether there are cost-effective ways to upgrade its IT systems and enhance its administrative processes to ensure the quality and timeliness of management information and reduce the risk of repeated errors”. The PAC also criticised the DWP for not giving pensioners enough information if they were worried they had been underpaid and added that the DWP currently has no formal plan for contacting the next of kin of the more than 15,000 pensioners who had been underpaid but are now deceased.

PAC Chair Dame Meg Hillier commented: “This is a shameful shambles... DWP is now on its ninth go at fixing these mistakes... [with] the specialised staff diverted to fix this mess costing tens of millions more to the taxpayer and predictable consequences in delays to new pension claims. And there is no assurance that the errors that led to these underpayments in the first place will not be repeated in the correction exercise.”