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Child benefit higher income penalty appeal

Anyone appealed successful against penalties imposed

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Got a prospective new client who has received tax assessments (outside SA) for failure to report and notify his liability to the higher income child benefit charge for 2012/13 to 2015/16. He has received notice to do a 2016/17 return though ironically his wife has now stopped the claim. There is little we can do about the tax, they have received the child benefit and he earns above £60k and more than his wife. HMRC have issued a 20% penalty for careless behaviour for the first 3 years and 10% for 2015/16 for failure to notify, the latter being reduced because he has replied on the phone to their original letter.

I have suggested he appeal the penalty as a stop gap but as anyone successfully appealed or got this reduced to say 10%

As an aside - HMRC should be ok on a "time to pay" arrangement. Anyone got experience on that re child benefit

 

 

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By Matrix
06th Apr 2017 21:59

What are your client's reasons for not paying the benefit back?

With regards to self-assessment penalties, if you write a letter these are generally withdrawn but I don't know about these types of penalties specifically, never had one.

If you write with all the grounds (did he think his wife had cancelled and it goes to a separate bank account, has he had his head in the sand?).

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By David Heaton
06th Apr 2017 23:40

If there's no reasonable excuse, the minimum inaccuracy penalty under FA07 Sch 24 for a careless SA error that is found by HMRC, rather than being corrected without official prompting, is 15%. It'll be nil if the excuse is accepted, or at least 15% if it isn't. Will it cost more than 5% of the CB repaid to argue the point if there's no reasonable excuse? HMRC will know you need to make that judgement, and can simply dig its heels in to make the fight uneconomic, if it's a marginal case that it might win at tribunal.

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By mkowl
07th Apr 2017 08:24

Thanks David, the total penalty over the 4 years amounts to £1,000 and hopefully his appeal letter will roughly halve it. I certainly wouldn't advise taking it to a tribunal because ignorance of the change and presumption HMRC would get this right is no reasonable excuse defence

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By mkowl
07th Apr 2017 08:18

Thanks Matrix, very much like you this type of case was new to me. Its one of those cases where the chap was on SA, then just went back on to PAYE and "presumed" his tax position was sorted each year via that process. Plus I guess a typical situation that his wife received the child benefit in a separate bank account and he thought no more of it. So there is a bit of head in the sand in that all the publicity of the change clearly passed him by. So he has only sought professional guidance on receipt of the letters. He accepts that he has to pay it back, but as part of the squeezed middle class been given 30 days to pay £5k back isn't so straightforward I guess. He objected to the penalty because as he said I just made a mistake, busy lives, work pressures that sort of thing. Why did it take 4 years to catch up with this. I have advised an appeal letter basically on the grounds you suggest but left him with the expectation of a min 10% penalty

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By JonathanD
10th Apr 2017 14:26

I thought HMRC had identified all the taxpayers that needed to do a return because of HICBC? Or maybe some slipped through the net.

I have another client who is also caught, so he will have to repay too for 2-3 years.

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By mkowl
10th Apr 2017 16:32

Yes that is what I presumed, so it was a bit of a surprise to get this question raised

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By Paul D Utherone
10th Apr 2017 17:12

How? Chances are one person is claiming benefit and another has the HICBC charge with no means of linking the two.

IIRC they may have sent out letters to those with income>£50k but generally relied on advertising as there was no direct link (necessarily)

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By Leighton Clare
09th Jan 2018 22:30

mkowl wrote:

Got a prospective new client who has received tax assessments (outside SA) for failure to report and notify his liability to the higher income child benefit charge for 2012/13 to 2015/16. He has received notice to do a 2016/17 return though ironically his wife has now stopped the claim. There is little we can do about the tax, they have received the child benefit and he earns above £60k and more than his wife. HMRC have issued a 20% penalty for careless behaviour for the first 3 years and 10% for 2015/16 for failure to notify, the latter being reduced because he has replied on the phone to their original letter.

I have suggested he appeal the penalty as a stop gap but as anyone successfully appealed or got this reduced to say 10%

As an aside - HMRC should be ok on a "time to pay" arrangement. Anyone got experience on that re child benefit

 

 

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By Leighton Clare
09th Jan 2018 22:49

Hi does anyone have any more information on the outcome regarding the fine for the honest mistake of the over claim case.

For the exact reasons as described I to have just received a letter outlining a fine to the sum of £5300.

I also agree the ruling itself makes me liable to the fine/repayment however find it harsh and unacceptable it has taken four years to make me aware of it and yes it has been explained to me today it is not hmrc's responsibility to do this.

I have never been asked to fill out a self assessment and always thought this would be dealt with as I am PAYE.
Ignorant one may argue but this ignorant tax pay of 40% contributes well over £20000 a year via stoppages which helps fund this country and yet feels hard done to.

(Should I join the world of self employment and simply bend the truth to avoid all of this)??

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By Mgt
26th Mar 2018 17:42

I've just had a client who has just realised that his partner has been receiving child benefit when not entitled since 2013. He has called HMRC to self notify of the issue. He is hoping that this will mitigate penalties. Had previously been in SA 15 years ago, but left the country, returned on PAYE and thought that the child benefit wasn't being claimed. Had a third child and realised with horror, it was still coming in. Any advice?

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By mkowl
27th Mar 2018 07:51

The client I was referring to did the negotiation directly with HMRC. It was a strange case as he only became a client after this process had started and really just wanted a 2nd opinion on what he was being told by HMRC. He ended up with a 10% penalty but got a time to pay arrangement. He did a 2k lump sum and then 12 month equal instalments which he has one to go by the looks of it

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By SteveHa
27th Mar 2018 09:38

I'd be tempted to go for suspension rather than appealing unless there is a compelling reasonable excuse.

Just had one settled and penalties suspended for 15/16.

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