Child Benefit - High Income

Child Benefit - High Income

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Afternoon All,

New SA client popped in with a letter from HMRC indicating she did not repay Child Benefit in 2012/2013 return.  Tone of the letter is mild - comes across as helpful even, and states 2013-2014 return must be submitted correctly, and HMRC "may contact you about your 2012-2013 return".

She claims she was unaware of the changes hence didn't complete that section of the return, and seems genuine.

Anyhow, I have calculated full year  for 2013-2014 correctly, and I have advised she should amend the 2012-2013 return to include the 12 weeks she is due to repay for last financial year and to pay the full amount this month.

any advice on what penalties/charges she might incur as a result of late payment of the 2012-2013 CB if we amend the return?

thanks for the heads up

cheers, mick

Replies (7)

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Euan's picture
By Euan MacLennan
20th Jan 2015 16:32

Interest @ 3% p.a.

She can amend her 2012/13 tax return at any time up to 31st January 2015.  Up to that date, I think that any communication from HMRC is not an enquiry which might mean that the disclosure was prompted, thus attracting penalties.

Anyhow, what option does she have?  Not amend the 2013 return by 31 January 2015, in which case penalties would definitely apply.

She will be subject to interest at 3% p.a. for the late payment of the tax which was due on 31st January 2014.

Thanks (1)
By Paul D Utherone
21st Jan 2015 13:29

Presumably

she was the highest earner of the household.

The HMRC letter was a scattergun & not targetted. For a start it is unlikely that their systems are sufficiently joined up toknow who was the higher earner, and IIRC people were complaining that it took no account of other reliefs & deductions that might have taken the recipient out of HICBC

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Euan's picture
By Euan MacLennan
21st Jan 2015 13:48

Highest earner?

Paul

Why do you think that the household is a ménage à trois?

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Replying to Accountant A:
Portia profile image
By Portia Nina Levin
21st Jan 2015 14:42

Euan!

Euan MacLennan wrote:

Paul

Why do you think that the household is a ménage à trois?

That took me nearly five minutes! You mean a ménage à trois plus though.

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By Paul D Utherone
21st Jan 2015 19:46

DOH!

What a difference two letters make

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avatar
By Minnie136
21st Jan 2015 21:24

8 kids

I very much doubt that anyone with 8 kids would let their income get to £50-60k since the loss of child benefit would be about £6k.  They are disincentivised by the system.

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Replying to Arcadia:
Portia profile image
By Portia Nina Levin
22nd Jan 2015 10:22

Au contraire

Minnie136 wrote:

I very much doubt that anyone with 8 kids would let their income get to £50-60k since the loss of child benefit would be about £6k.  They are disincentivised by the system.

I think you only need 7 kids to get child benefit of £6K per year, but you only lose all of it when your income gets to £60K+. Rather than not earn the money, it is better to earn it and put it into a pension that when you are 55+ and the kids are all grown up you can just take back out.

I is an unfair and ill-thought out system nonetheless.

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