< Go Back HMRC to review High Income Child Benefit Charge (HICBC) penalties for failure to notify. Posted: Nov 9, 2018
HMRC has previously issued a significant number of assessments and penalty notices to those who have claimed Child Benefit but where one partner has earned over £50,000 (
very broadly total chargeable income after pension contributions made); which prompted the requirement to register with HMRC to pay the High Income Child Benefit Charge (HICBC). HMRC has recently announced that it is reviewing cases where a failure to
notify penalty was issued to taxpayers who did not register for the High
Income Child Benefit Charge.
The High Income Child Benefit Charge:
Applies when an individual or their partner is in receipt of Child
Benefit, and one of those persons has net income in excess of £50,000
per year. Taxpayers who must declare the HICBC are required to notify chargeability to HMRC by registering for SA.
The HMRC say that their review will apply to 2013/2014, 2014/2015, and 2015/2016 and refunds of any failure to notify penalties will be made if HMRC finds the taxpayer had a reasonable excuse for not registering with them at the appropriate time.
HMRC have said they may accept that a reasonable excuse exists and such circumstances may include:
Where a claim for Child Benefit was made before the HICBC was in 2013/14 (applying to Child Benefit paid after 7 January 2013). Where one partnerís income subsequently increased to over £50,000 in or after the 2013-2014 tax year.
The review will not include anyone who received communications from
HMRC about HICBC or first claimed Child Benefit after the charge was
introduced in legislation in 2012 to 2013.
This review is in addition to the two conflicting decisions recently coming out of the First Tier Tax Tribunal on this specific point;
In James Robertson v HMRC 2017 [TC6410] the FTT decided that HMRC
was unable assess penalties for failure to notify a High income child
benefit charge. The taxpayer was not in self assessment and the
legislation does not allow HMRC to
make an out of time assessment (discovery) for something that is not
'income' and in any event HMRC already had the information they required and so any discovery was
'stale'. This case is, we understand, appealed and is to be heard by a higher Court.
In David Lau v HMRC [2018 TC6463] the FTT decided not to follow the
decision and decided that a discovery assessment was possible and thus
penalties did apply for failure to notify the HICBC on the basis that
potential lost revenue is not confined to assessments. General ignorance of the
law regarding the HICBC was not considered a reasonable excuse.
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