High Income Benefit Charge penalties – did you know about it?

Published by Jo White on 25 October 2019

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The High-Income Child Benefit Charge (“HICBC”) was brought in from 7 January 2013 to clawback child benefit claimed where the claimant or their spouse/ cohabiting partner received adjusted net income over £50,000.

Where the rules apply, any child benefit claimed is clawed back on a sliding scale such that it is fully repayable by the time adjusted net income reaches £60,000.

Many taxpayers have fallen foul of the rules since they were introduced and suffered failure to notify penalties as a result.

A tax case in the Summer highlighted the validity of the penalties and sparked a review by HMRC as to whether the penalties were fair the results of which were recently published.

As a result of their review, HMRC issued refunds in 4,885 cases out of the 35,000 considered covering the tax years 2013/14 – 2015/16 where the taxpayer had a reasonable excuse.

From 2016/17 onwards HMRC have been writing to taxpayers who they think are liable for the HICBC. It is unlikely they will agree a reasonable excuse for failing to notify where the taxpayer has received a letter telling them about it.

This article was written by Katie Evans, Tax Consultant. If you would like to discuss the above, please contact us.

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