Penalties warning as child benefit deadline looms

Individuals earning more than £50,000 who have failed to opt out of child benefit and do not register for self assessment by 5 October risk being severely fined.

The deadline this year will for the first time have detrimental consequences for individuals or couples who earn more than £50,000 and who have claimed child benefit since 7 January 2013.

HMRC has said around 400,000 parents have opted out of receiving child benefit payments, with 530,000 registered for self assessment. That leaves around 220,000 people who still need to register by the October deadline.

With this key deadline approaching, and potentially steep penalties at stake, a number of tax experts have urged people to get in touch with HMRC.

Chas Roy-Chowdhury, head of taxation at the ACCA, told AccountingWEB...

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JCresswellTax's picture

Is that correct?    1 thanks

JCresswellTax | | Permalink

"

Chas Roy-Chowdhury, head of taxation at the ACCA, told AccountingWEB that is was extremely important individuals tell HMRC otherwise they will be late filing their tax return.

“There’s going to be penalties for that of around £100,” he said, “and then penalties for not declaring the income and tax on that, and that will run up to hundreds of pounds.”

If you don't inform HMRC and, therefore, dont get issued with a Tax Return, why would there be a £100 late filing penalty?

Even if you didnt inform HMRC until 30th January 2014, you still get 3 months to file the Return, so it wouldn't necessarily be late?

I agree a failure to notify penalty may kick in, but not a late filing penalty?

Anyone agree?

If so, poor statement from the head of tax at ACCA!

CHIB and potential loss of Pension Credit    1 thanks

mikefleming3028 | | Permalink

 

Of the 400,000 people who have opted out of receiving CHIB I wonder how many are aware that if they are not in paid employment they will lose out on the Pension credit that they would automatically qualify for if they continued to receive CHIB. HMRC web site does not make this clear and as a result the possibility of protecting future State Pension, basic or otherwise will have been lost. I do hope that HMRC has informed these people of the problem and that they should still fill in the CHIB claim form to safe guard their credits so as to protect their future State Pension. I believe the onus is on HMRC to do this and any future loss of pension rights could well result in potential claims against that department. If HMRC are pressing their" customers" to give up a benefit that will have a major effect on their future pension income then does this not amount to the giving of "financial advice" with all of the responsibilities that goes with it?

Does HMRC have anything to say on the subject, lets wait and see ?

.

ireallyshouldkn... | | Permalink

@Jcresswell I quite agree. Wrong penalty. 

Moreover I have never in 10 years seen a single "failure to notify" penalty being levied on a single client.

We do back taxes more or less once a month for clients who start with undeclared incomes, ie we have quite a big sample size, so long as you come forward eventually nothing much happens.

I also don't think HMRC even have the systems to identify who the higher tax payer *might* be in a household in receipt of CHB based on the scattergun notices that have been issued to those earning over £50k, as its not something they have ever had to work out before. And all of course for 3 months of CHB which is not a very big number...

listerramjet's picture

typical bl***y joined up thinking

listerramjet | | Permalink

they give it with one hand, and take it back WITH PENALTIES with the other.  

But apart from the poor communication (I have had nothing from HMRC telling me what I need to do about this, apart from a letter telling me I should stop claiming - nonsense as I don't claim it, my wife does)  what winds me up most is that they require me to file a tax return telling them stuff they already know. 

ireallyshouldknowthisbut

hiu612 | | Permalink

I agree - we regularly register clients who've failed to keep up to date with their tax affairs. Whilst they are exposed to a variety of interest and possible penalty charges, we very rarely see a late registration penalty applied. I suppose the only difference here is that HMRC seemingly have all the information (who has the benefit been paid to, who has earned > £50k on PAYE, and who has filed a return) so there is a chance of HMRC coming to the taxpayer rather than the other way around.

Its going to be a mess, whatever happens

Confusing

Klandrews | | Permalink

I thought I would be declaring the Child benefit received on my tax return rather than my lowly paid spouse who has no requirement to fall into SA having to complete a tax return.  Am I wrong?  Does he have to complete a return?  Where is the notification?  We are only still receiving Child Benefit because we need to protect his pension rights.  It's all a complete mess, completely unclear and is just going to cost the Govt more than they are "saving".  As Craig would say, it's a disaster darling!

 

Have just checked the form to register for a return with HMRC and it requires you to earn over £50k.  I'm pretty sure I declare the Child Benefit!

Kathryn15's picture

Relevance of earnings

Kathryn15 | | Permalink

It is possible for someone with "earnings" over £50k not to be liable for the HICBC as it is net adjusted income that is taken into account. Is it necessary to register for Self Assessment if your income before deduction of pension contributions and gift aid payments is more than £50k but your net adjusted income (i.e. after deduction of these items) is less than £50k? The word "earnings" is too vague.

JCresswellTax's picture

Totally agree

JCresswellTax | | Permalink

ireallyshouldknowthisbut wrote:

@Jcresswell I quite agree. Wrong penalty. 

Moreover I have never in 10 years seen a single "failure to notify" penalty being levied on a single client.

We do back taxes more or less once a month for clients who start with undeclared incomes, ie we have quite a big sample size, so long as you come forward eventually nothing much happens.

I also don't think HMRC even have the systems to identify who the higher tax payer *might* be in a household in receipt of CHB based on the scattergun notices that have been issued to those earning over £50k, as its not something they have ever had to work out before. And all of course for 3 months of CHB which is not a very big number...

I've actually NEVER seen a failure to notify penalty!

Crazy

mhtax | | Permalink

Just ran a calculation for net adjusted income including benefits of about £52,000 - tax charge is around £30. Below the de minimis of £50 for normal PAYE but if he goes into self assessment will be coded next year - cost of collection well over take. Then ran 2013/14 and charge goes up to £95 .

@ Klandrews - if you are the higher earner you declare the benefit whoever receives the CB. Also, it is not only spouses so anyone sharing a house needs to check their position

robertlovell's picture

165,000 miss child benefit deadline

robertlovell | | Permalink

HMRC has revealed that around 165,000 people have missed a deadline to register for self assessment over their collection of child benefit.

Around 29,000 people registered in the final hours before the 5 October deadline.

An HMRC spokesperson said: “On past experience we expect more people to register in the coming days. Although we are past the deadline, people should still register for self assessment to minimise any penalties they may face.”

HMRC also that those who remain could still complete the paperwork - they will need to complete a tax return by 31 October if it is on paper, or by 31 January online.

It is expected that anyone who signs up and pays the tax due by 31 January will not receive a penalty – which would be between 10% and 100% of the child benefit paid, plus refunding the appropriate amount.

listerramjet's picture

inappropriate language

listerramjet | | Permalink

I think Lin Homer was apparently quoted as saying the laggards should "get off their backsides".  Just sounds wrong for a public servant to refer to her "customers" in this fashion - or am I being overly sensitive?

Penalty???

mhtax | | Permalink

How can any penalty be a percentage of anything other than the tax charge