HMRC treat HICBC separately from rest of tax?

Can HMRC demand payment of tax due arising from the HICBC although tax is repayable?

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My friend has received a letter from HMRC Compliance advising him he is due to pay tax arising from HICBC in 2012/13 to 2015/16.  He realises that he should have registered for Self Assessment and submitted tax returns for those years but did not. He has informed the Compliance department that he made pension contributions and Gift Aid payments and, although they have adjusted the income relevant for calculating HICBC accordingly, they have not given him the higher rate tax relief due.  HMRC is demanding payment of around £2,700 plus interest and penalties and he has been told that they don't care about his overall tax position as that is dealt with by a different department.  This seems ludicrous.  Surely if he is entitled to tax relief, the compliance check should take this into account when calculating the amounts of tax, interest and penalties due by him.  I have calculated that overall he is due a tax repayment.  I am an accountant but am not authorised as my friend's agent so cannot speak to HMRC on his behalf.  Does anyone else have any experience of HMRC separating the HICBC from an individual's overall tax position in this way?  Should my friend pay the tax, interest and penalties demanded then make a separate claim for tax relief?  This does not seem to be the most efficient way of arriving at the correct position.      

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By halblackburn
11th May 2017 15:20

Your friend should register for Self-Assessment asap. It is possible to register online.
Once a UTR (Unique Taxpayer Reference) has been issued they can submit the missing tax returns.
The 2012/13 tax return will have to be sent to HMRC as a paper return; any repayment due from 2012/13 won't be repaid as 2012/13 is outside the 4 year limit for claiming a repayment.

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Replying to halblackburn:
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By Kathryn15
11th May 2017 15:42

Thanks for your reply. As the first letter from HMRC arrived in March and I realised he was close to the deadline for claiming relief for 2012/13 I advised him to write to HMRC immediately to advise them of the pension contributions and Gift Aid. He has therefore claimed relief before the deadline, just not by submitting a tax return for that year. He will complete the tax returns for the years concerned but the Compliance department are putting him under a lot of pressure to pay up in the meantime, even though they have the information required to assess his tax position fully.

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By SteveRA
11th May 2017 16:39

It is certainly a different department that is dealing with these child benefit matters. I needed to contact them recently to challenge a charge for 3 years HICBC as he had not received any CB.

The people I dealt with were very easy to deal with and gave me the name of the person who had claimed (not my client or his wife) and we resolved the matted easily, although I initially doubted my client when he claimed there was no CB received (shameful) but this is clearly not your situation. It simply confirms that it is not the normal agent line that you deal with. They do not have access to ordinary tax records. They only deal with CB tax matters and so you DO still need to chase up what will effectively be an 'overpayment relief' claim for the tax overpaid due to gift aid and pension contributions.

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By SteveHa
12th May 2017 08:50

Complete Returns without a UTR and send them to the office dealing with the review. This will bring the whole thing into S9A forcing them to look at the whole tax position.

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