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Child Benefit Charge

How best to disclose it.

Didn't find your answer?

I had a new client last year, who we onboarded and his income had just had gone over the £50k.

He left the CB section on out tax return questionaire blank as he was not aware his wife was cliaming it.

Anyway HMRC have picked this up and raised a query into it, is the best way to handle it to file a revised return which we are within time to do and pay the extra charge or as its been prompted will we also get penalities, and if so how likely are they to be appealed.

This is a badly publicised stealth tax and I suspect a lot of people get caught out by it.

 

Replies (10)

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By JDBENJAMIN
20th Nov 2019 09:49

Have HMRC merely queried it informally, or have they formally raised an enquiry? If the latter, you can only do an amendment with their agreement. If the former, just amend it and explain what you have done to HMRC. My experience is that they won't raise a penalty for this sort of error unless there are other things wrong as well.

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By Roland195
18th Nov 2019 11:33

If you quote any half plausible reason, they don't tend to issue penalties so long as you co-operate & don't make life hard for everyone.

I'm not sure about a stealth tax but it certainly is poorly thought out & oddly administrated. Flies in the face of separate taxation of couples for one thing especially where each maintains there own finances separately.

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By SXGuy
18th Nov 2019 11:38

Had one recently, where a client failed to disclose whether he or his partner were claiming child benefit, HMRC opened an enquiry, after trying to contact client with no luck, time passed and HMRC wrote again to say as they didn't receive any response they have amended it themselves and further tax due.

No mention of penalties, just the extra tax burden.

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By MJShone
18th Nov 2019 12:18

It doesn't deal with how best to disclose, but see this thread: https://www.accountingweb.co.uk/any-answers/repayment-of-child-benefit

HMRC do have a policy on HICBC penalties: https://www.gov.uk/government/news/review-for-high-income-child-benefit-...
but in my experience are being more lenient. (Maybe the particular HMRC person dealing with my client wasnt aware of the policy).

How best to disclose? Since HMRC obviously know about it, I'd just cover in a letter where you can set out the circumstances that mitigate the penalty eg separate bank accounts, didn't know wife was getting it etc.

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By SteLacca
18th Nov 2019 12:43

I've been successful escaping penalties for clients in exactly that situation. (As I've said before, there is no law that requires one party in a relationship to disclose their financial information to the other - which is what makes the current implementation of HICBC so bad).

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By Mr_awol
19th Nov 2019 10:29

I'd just agree the amendment and get HMRC to make it their end. If they go to penalties you should be able to get them cancelled or suspended without too much effort as already stated by others.

Isn't it about time the threshold got a substantial increase? Is £50k really 'high income' these days? I'm not convinced...…...

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Replying to Mr_awol:
By Glenn Martin
19th Nov 2019 11:31

Yes I agree it badly thought out, like the removal of your PA after £100k earnings.

I think they could do a better job of informing the public, with notices of any paperwork they send out "if you earn more than £50k you may not be entitled to claim this.

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By christina makhoul
20th Nov 2019 11:05

recently had this on a client. quick admission of error let HMRC amend and reviewed and declared other years. no penalties on any years and client position regularised - no worse off than if they got it right in 1st place except interest. if hmrc correct no point in arguing and would let them amend fig rather than refiling as they probably have to formally close the case - my client had assessments issued

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By David Gordon FCCA
20th Nov 2019 11:10

You have confused me.

If you are able to file a revised 2018-2019 Tax Return before 31st Jan 2020, then there should not be a penalty because a correct return has been filed within the statutory filing date.
Just thank the HMRC officer for reminding you.

If it is for 2017-2018, humbly explain the circumstances to HMRC, and pay up.

At some time or other most of us get caught by this.

Remember that this circumstance may also be applied where HMRC are aware that the recipient is an unmarried cohabiting partner. Except that if the child is not offspring of the higher earning partner, that person may try claiming he or she is not financially responsible for the child. (In loco parentis)

It is correct that each person's tax affairs are confidential to that person. Unfortunately this badly thought out regulation disregards that rule.

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By allan613
20th Nov 2019 13:21

I once had a case where the wife had a separate interest-bearing bank account that the husband did not know about, and the Revenue indicated to me that there was interest missing on the Return. I asked the client to ask his wife if she had an account. The following day he phoned me to say 'No'. Five minutes later the wife phoned to say she had been putting money aside, in an interest-bearing account, for when she was going to leave her husband. She subsequently supplied me with a bank letter confirming the interest. I explained the position to the Revenue and they were not surprised about it, as it happens fairly frequently. In the following years I asked the client to take the Return home, and run through it with his wife, and then the following day she would phone me, and send me the bank letter which I would then attach to the Return, and the Inspector was happy with it. BTW, there was also a note on the file for the staff not to ask the client for this information, nor were there any penalties and fines for that year.

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