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Child benefit charge

is it due?

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i have a client who has received a letter from HMRC suggesting they have to pay child benefit charge and would they like to amend their 17/8 tax return

the client has rental profits of £55k but in the year used losses bfwd of 34k, giving a net taxable income £21k - well below the threshold for the CBC

it seems  HMRC are looking at their income before loss releif, can anyone advise if this is correct or not?

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By Matrix
22nd Jan 2019 21:49

No. The HICBC office has not even looked at the return.

The letter was probably generated because he has previously been a high earner.

I dealt with one today, tax return filed with £20k income 6 months ago and my client has received 4 letters since then. Surprisingly the system is not joined up and I told them so. They took him out their system.

Either call the number on the letter or just tell your client to ignore it.

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By Crouchy
22nd Jan 2019 22:02

thanks

just got me doubting myself

the client in question has never had income above the threshold

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Replying to Matrix:
RLI
By lionofludesch
23rd Jan 2019 09:49

Matrix wrote:
Surprisingly the system is not joined up and I told them so.

I don't understand.

Why are you surprised ?

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RLI
By lionofludesch
23rd Jan 2019 09:48

I had one just before Christmas.

HMRC wanted £4290, I whittled it down to just over £1000. If the taxpayer had kept better records, I could probably have got rid of the lot. One of the big factors was his mileage, for which his miserly employers were giving him 20p a mile. Another was his new pension plan, which he'd not bothered to mention to HMRC.

Look at the calculation critically - HMRC might not have all the information they need to get the assessment right.

Bit surprised if they'd not picked up on the rental losses, though. Presumably they'd be on the return, would they not ?

I have to say that, in the instant case, the HICBC was correct, based on the information available to HMRC at the time, including tapering where the income was between £50000 and £60000. It wasn't just a flat request for the entire wedge paid to Mrs Client.

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Replying to lionofludesch:
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By Matrix
23rd Jan 2019 12:30

These letters are generic, they are not a bill.

They are generated without any link whatsoever to the submitted tax return, they are just sending them to as many people as possible who could be affected.

It is the usual case of them not using info they have.

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RLI
By lionofludesch
23rd Jan 2019 12:48

They might be generic but the taxpayer definitely thought it was a demand.

I have to say that there was a threatening overtone to it. Mentions of penalties, vague implications that the taxpayer was dishonest - that sort of thing.

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By Dib
23rd Jan 2019 13:22

Aah, the Nudge Nudge Unit at its finest!

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By kenny achampong
23rd Jan 2019 13:56

I had a similar threatening letter from HMRC regarding underdeclared PRS/music royalties. After checking everything, I called HMRC and said we've double checked everything with a fine toothcomb and we really cannot find anything wrong and asked for them to let me know where their info came from. They just said there was wasnt any info, they were just sending out generic letters threatening people who have received royalties from PRS. How they come up with some of their mad ideas is beyond belief.

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Replying to lionofludesch:
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By Matrix
23rd Jan 2019 14:12

There's no doubt that they are out of order and again highlights the weaknesses in HMRC's systems by not picking up info automatically.

Ironically I won this client since I advised him to register for child benefit (used to be very high earner but now part time consultancy). His first child was born since the new rules came in so his wife never registered so has missed a few years of NI credit. So being aware of the rules has its downsides but at least I picked it up.

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