Client caught up in Wilkes Child Benefit Case

Client caught up in Wilkes Child Benefit Case

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I have new client who has come to me with regard to a child benefit issue. The issue is that they never declared (didnt realise) that they were not eligible for child benefit due to Husbands earnings being over £60k. HMRC caught up with them issuing a bill for £7,000 but putting it on hold pending the outcome of Wilkes and their appeal.

In the meantime HMRC told client that were "legally" obliged to register for self assessment in order to declare the high income tax charge position which they did but didnt realise that they actually had to do anything so didnt file returns for 19-20 and 20-21 and have incured penalties.

If I understand this correctly, Wilkes is all due to the fact that HMRC have used discovery assessments and this is being queried as an invalid mechanism as it is there to identify mising income and child benefit isn't income?

Given that my client has on the face of it volutarily registered for self assessment and will therefore be required to disclose earnings and exposure to HICBC, would HMRC view that as a valid way of identifying that the charge was due hence the fact that the client has registered and will now have to file returns will render them liable to the HICBC charge for 19-20 and 20-21 and this will not fall under the Wilkes postion?

Asuming the above is all correct, the query is that were HMRC correct to tell the client that they legally have to register for self-assessment in order to disclose the HICBC? Client now in predicament as getting penalties added for non filing of 20 and 21 self assessment but doesn't want to file if HMRC advice incorrect meaning that the HICBC for those years would also then be caught under Wilkes and they might not have to pay?   

Thanks

   

Replies (9)

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By Paul Crowley
08th Feb 2022 15:21

Am I correct in thinking that tax returns were issued and willfully ignored?
When did HMRC catch up with them?

No dates given in the opening post

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By David Ex
08th Feb 2022 15:43

No experience or knowledge of the specifics but if you are suggesting that your clients can rely on the Wilkes case to avoid the HICBC years after being made aware of the charge and failing to pay it by not submitting SA returns, I suspect you may be wrong.

HMRC’s view:

https://www.gov.uk/government/publications/high-income-child-benefit-cha...

“Individuals who need to pay the charge must submit a Self Assessment tax return each tax year, even if they are employed, and normally pay their tax through Pay As You Earn (PAYE).”

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By CJaneH
08th Feb 2022 16:27

If HMRC has identified them as higher rate tax payer and sent normal paperwork instruction them to register for Self Assessment because of child benefit what defence have they got. If they did not understand the paper work they should ask an accountant or contact HMRC.
If HMRC issue a request for a tax payer to complete a return he/she is required to complete and submit or contact HMRC and explain and convince them no return required.

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By cbp99
08th Feb 2022 16:57

Possibly pedantic response, but it's not true to say "they were not eligible for child benefit".

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By gillybean04
08th Feb 2022 17:06

The ruling only relates to discovery assessments (not simple assessments or self assessments) and HMG made a retrospective change to the law to clarify discovery powers do, and always have, extended to hicbc.

There's a page on www.gov.uk which explains the retrospective change means only those who had made an appeal on the same point of law as wilkes and submitted that appeal before 30th June 2021 can rely on the wilkes case. But my phone is refusing to paste the link.

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Replying to Not Anonymous:
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By gillybean04
08th Feb 2022 21:02

That's the one, thank you.

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By Not Anonymous
08th Feb 2022 20:07

They're not going to be able to avoid Self Assessment for 2019/20 and 2020/21 but they could avoid late filing penalties for 2020/21 by filing this month.

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By More unearned luck
08th Feb 2022 20:10

It's not registration that gives rise to an obligation to file returns - it's the issue of notices to file that does that. Ask your client why he ignored those notices. The answer might amount to an RE.

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