HMRC to review High Income Child Benefit Charge cases

HMRC to review High Income Child Benefit Charge cases

Some High Income Child Benefit Charge cases are to be reviewed by HMRC, where a 'Failure to Notify' penalty was issued for certain tax years.

Individuals who have an income of over £50,000 and a partner who receives Child Benefit; or if a third party receives child benefit for a child that lives with them and provides at least an equal amount towards their upkeep, are required to pay the High Income Child Benefit Charge.

Introduced in 2012 and applicable regardless of whether the child is their own, an individual needs to register themselves for this tax. But, with many previously unaware of this requirement and therefore failing to register, the HMRC has committed to reviewing cases where a ‘Failure to Notify’ penalty has been issued for the tax years 2013 to 2014, 2014 to 2015, and 2015 to 2016.

Unusually, whereas an individual would more often than not have to explain why they have a reasonable excuse for not paying any taxes due, in this case the HMRC are proactively reviewing the penalties after taking into account feedback from the public.

Refunds will be automatically issued if the HMRC finds that there is a valid excuse for not meeting a tax obligation, and each case is being reviewed on its own individual circumstances.

Some reasons are believed to carry some weight if it can be seen that appropriate care has been made to meet all other tax obligations, and these include:

  • Families who have made a claim for Child Benefit before the High Income Child Benefit Charge was introduced.

  • Where one partner’s income has risen to over £50,000 in or after the 2013 to 2014 tax year. This is because the higher earner in a household who is required to pay the charge, may not be the same person claiming Child Benefit on behalf of the household.

However, HMRC have made it clear that the review of the failure to notify penalties will not include individuals who had been notified by HMRC regarding the High Income Child Benefit Charge, or those who have claimed Child Benefit after the charge was introduced in 2012 to 2013.

In addition, HMRC are making every effort to ensure that those who may be liable for High Income Child Benefit Charge in 2016 to 2017 and 2017 to 2018 are being contacted by post, so that they may take appropriate action to avoid any penalties and meet their current tax obligations.

It is also understood that HMRC will automatically refund any due penalty automatically over the next six months and taxpayers do not need to contact them for a review.

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