Child Benefit – you maybe able to get money back

HMRC may have got it wrong over child benefit tax, says Paul Lewis

Young kids having fun, holding onto Daddies hand and running and spinning in a garden.

Hundred of thousands of people may be able to get back money paid to HMRC after a court ruled it had been using the wrong powers to recover past payments.

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The people affected have an income over £50,000 and live with a partner who gets child benefit.  They should have paid a tax called High Income Child Benefit Charge to offset some or all of the child benefit their partner received. This charge began in 2013, but not everyone knows about it.

When child benefit is claimed for a new baby, these rules are explained. They are also contained in self-assessment tax returns. But HMRC relied on the media to tell people about the new high-income means test that applied to child benefit. As a result, many people simply do not know about it.

For the past three years HMRC has been writing to people whose income was above the limit if child benefit was being claimed by someone at their address. It sent out 100,000 such letters in 2018 alone. If the recipient confirmed that they did earn over £50,000, and they or their partner did receive child benefit, then HMRC has been issuing a “discovery assessment” to recover the unpaid tax. This can amount to thousands of pounds.

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A taxpayer called Jason Wilkes appealed, his lawyers Collyer Bristow arguing that the assessment was designed for income tax and could not be used to recover the unpaid charge. He won, HMRC appealed, but in June the Upper Tribunal rejected HMRC’s attempts to show it had behaved lawfully.  Collyer Bristow has called on HMRC to refund everyone who paid HICBC arrears after receiving such a discovery assessment, but HMRC could appeal again – so the advice for those who think they’re due money back is to watch and wait for an announcement from HMRC. Search “collyerbristow.com HICBC update” online for more information.
Paul Lewis presents Money Box on Radio 4.