What is the reasoning behind HMRC letter re high income child benefit charge?

What is the reasoning behind HMRC letter re...

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We have received a number of enquiries from our clients about the letters issued this week by HMRC regarding the high income child benefit charge.  They seem to have targeted client's where the profit is greater than £50k without taking into account any allowable deductions such as pension contributions.   The letters give no telephone number for the clients to contact and simply refers them to the website and suggests that the 2012/13 tax return needs to be amended.  There is insufficient information in the letter for the clients to make an informed judgement if they are affected. 

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By johngroganjga
22nd Aug 2014 11:54

Are these all clients who have submitted 2012/2013 returns?

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Replying to Tax Dragon:
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By tazmaniandevil
22nd Aug 2014 12:30

To john(surelydoesnt)groganjga

Yes - letters are for 2012/13 Tax Returns!

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Replying to Tax Dragon:
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By b1lly
25th Aug 2014 09:02

Yes they are

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By tazmaniandevil
22nd Aug 2014 11:57

Just called Agent line ...

Just received a call from upset client.  Has received the same letter stating "You need to act now!".

HMRC confirmed they do not check partner's income - which is a shame as, in this instance, the HIC is on the partner's TR!!

The contact on the agent line said that they had already taken several calls and each time no adjustment was required the Return.

Yet another example of poorly worded, standard scare mongering letters issued by HMRC - at the taxpayers cost and which cause clients to doubt their agents!!     

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Replying to User deleted:
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By Mick Milne
22nd Aug 2014 12:21

same here

tazmaniandevil wrote:

Just received a call from upset client.  Has received the same letter stating "You need to act now!".

HMRC confirmed they do not check partner's income - which is a shame as, in this instance, the HIC is on the partner's TR!!

The contact on the agent line said that they had already taken several calls and each time no adjustment was required the Return.

Yet another example of poorly worded, standard scare mongering letters issued by HMRC - at the taxpayers cost and which cause clients to doubt their agents!!     

 

My wife got one 2 days ago; she panics about these things and wasn't overly convinced when I explained it was fine, as I had paid it in my 2012/13 return.

Just to be on the safe said, better empty my bank account before someone else does!

you have to laugh....

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By Manchester_man
22nd Aug 2014 12:22

I too have received an email from a bemused client. I've only just logged on here and have spent since 9am (on and off) dealing with this. It's now 12:20.

An absolute disgrace.

Of course, at first look by the client, the assumption is that the 'accountant must have made a mistake'.

HMRC - not fit for purpose :-(

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By Jane Wanless
22nd Aug 2014 12:30

My husband has had letters recently about HICBC.  Our son is now 24 and we've therefore not had CB for years, but still we get letters re a possible charge for 2012/13.....

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Replying to Lusine.K:
By Paul D Utherone
22nd Aug 2014 12:44

I seemed unable to stop

janewanless wrote:

My husband has had letters recently about HICBC.  Our son is now 24 and we've therefore not had CB for years, but still we get letters re a possible charge for 2012/13.....

annual letters re child tax credits in re my 26 & 28 year old sons :O
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By monksview
22nd Aug 2014 12:32

3 of my clients received them.  I checked that I had already included the HIBC on their returns, which I had, and just told them HMRC are idiots and to ignore the letter (but confirming that they should always let me know when they receive something due to HMRC regularly omitting to inform agents of anything).

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By michaelblake
22nd Aug 2014 15:08

Yet another large scale mistake

It is another major error. The letter is wrongly worded when it is sent to the partner who is not the higher earner, since it states (incorrectly) at line 8 

you should have included the Child Benefit payments from 7 January 2013 to 5 April 2013 on your tax return”  

and at line 10 

"you have to pay the tax charge"

and at line 13 advises the recipient to

“amend your tax return for 2012 to 2013”.

Line 8 would read more correctly if it said  “you, or your partner/spouse if they were the higher earner should have included the Child Benefit payments from 7 January 2013 to 5 April 2013 on their tax return”  

and line 10 should then read “the higher earner has to pay the charge for 2012 to 2013”

I have already spoken to one person who having received the letter has amended their return incorrectly. You would have thought that such an important letter would have been checked for accuracy before being released as a bulk issue to tens (hundreds?) of thousands of taxpayers.

The letter encourages precipitate action since it is headed in red type underlined and overlined in red "High Income Child Benefit Charge - you need to check your self assessment" and has a prominent red box with white type noting that "You need to act now!" 

I have written to question the accuracy of what is said in the letter and suggest that others do the same. 

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By justsotax
23rd Aug 2014 13:07

Same as above
I have written to HMRC with confirmation of adjusted income (which is below 50k) and requested confirmation no action required.

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By Steve Kesby
24th Aug 2014 09:27

It's a shame...

... if it were worded more helpfully, it could have been a real coup for HMRC.

There are people out there who will genuinely not have paid the HIBC for 2012/13, otherwise than by dishonesty, and who could just amend their tax returns as a result, without enquiry or penalty.

As it is, more fuel has been thrown on the "how can we trust these people with access to people's bank accounts" fire.

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Replying to shinobi_brian:
Locutus of Borg
By Locutus
24th Aug 2014 09:39

Agree

Steve Kesby wrote:

As it is, more fuel has been thrown on the "how can we trust these people with access to people's bank accounts" fire.

In a few years time the letter will read "We note you appear not to have paid the HIBC. We have taken £x from your bank account. There is an appeal process if any of our customers disagree with this decision."

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By b1lly
25th Aug 2014 09:06

I think the most annoying thing is that they are not using the adjusted income figure just looking at the level of profit.

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By 0106781
28th Aug 2014 10:46

Had one myself

I had letter myself. I receive the child benefit and am the highest earner. I submit a Tax Return. If they have "checked my 2012/13 Tax Return" as has been stated then they would know I should not receive the letter. My adjusted income is below £50k.

I agree with those that said they do not seem to be taking into account allowable deductions when looking at adjusted income. My income is above £50k, but I have pension contributions, gift aid and loan interest payments that all reduce it below.

Have noticed though on the revenue calculator there is nowhere to put loan interest paid or losses, so if they are using their own calculators to calculate the charge that is where their misunderstanding could happen!

Also agree it does look like we have done something wrong when client rings up worried about the letter.

As HMRC dont seem to acknowledge their failings I think another letter/complaint to my MP is called for. (He sorted out CIS repayments from Companies for me when they advised would take 6 months to repay. Once they had a letter from him, I had a phone call the next day and the repayments within a week!)

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