HMRC to review High Income Child Benefit Charge penalty cases

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The High Income Child Benefit Charge (HICBC) is a tax charge which claws back up to 100% of any child benefit received by a higher earner or their partner. Even though the charge is not assessed as income, it is reportable and collected under Self Assessment (SA).

Taxpayers who must declare the HICBC are required to register for SA and pay their HICBC by 31 January following the end of the tax year. There is no specific penalty which applies to the HICBC: the standard penalties under SA apply.

HMRC has announced that it is reviewing cases where a failure to notify penalty was issued to taxpayers who did not register for the High Income Child Benefit Charge.

The High Income Child Benefit Charge (HICBC):

  • Applies when an individual or their partner is in receipt of Child Benefit, and one of those persons has net income in excess of £50,000 per year.
  • Taxpayers who must declare the HICBC are required to notify chargeability to HMRC by registering for Self Assesment.

The HMRC review will apply to 2013-2014, 2014-2015, and 2015-2016 and refunds of Failure to notify penalties  will be issued if HMRC finds the taxpayer has a Reasonable excuse for not registering.

Cases where HMRC have said they may accept that a reasonable excuse exists include:

  • Where a claim for Child Benefit was made before the HICBC was introduced.
  • Where one partner’s income subsequently increased to over £50,000 in or after the 2013-2014 tax year.

As with all of our tax tips and web pages this information is necessarily summarised and of a general nature.  If you would like detailed specific advice please contact us.