My client earns over £50k and has two children. One of the questions in my annual self assessment checklist is whether child benefit is claimed. When I first started acting for him (2016-17 tax return), my client had to check this with his wife, which he did by e-mail, copying me in on his wife's reply where she said that no child benefit was claimed, and that she had not received the benefit for many years.
We've now received a letter from HMRC for a check of the self assessment tax return for 2017-18 in respect of the HICBC. I asked my client to check the information he had previously given me on child benefit - his wife called the child benefit office and it turns out they have been claiming child benefit, paid into a joint bank account, but he assures me that they had no idea the benefit was being received, as they don't routinely look at their bank statement or take any particular note of transactions on the account. His wife said she recalled hearing about the HICBC in the media but thought that the benefit would be stopped automatically for those affected.
Obviously I need to write back to HMRC with this information, and I wondered if other practitioners who may have encountered such checks before would have any tips to share on how to mitigate the potential penalty. I plan to argue that my client did take reasonable care in completing his return by checking with the claimant as to whether the benefit was actually claimed, and have the e-mail correspondence as evidence of his "conversation" with his wife regarding receipt of the benefit.
The client is very willing to pay all of the outstanding HICBCs, for all relevant tax years - even though the check itself only applies to 2017-18. I'm sure HMRC would start looking at earlier tax years though, so I presume it makes sense to make an unprompted and full disclosure of the child benefit claimed for all earlier years.
I'm quite astounded that someone could receive child benefit for many years and have no idea, but I do actually believe the client when they say they simply didn't look at their bank account. Whether HMRC will also believe them remains to be seen!
Any tips or advice would be much appreciated.