High Income Child Benefit Charge *Help*

[Marcus001]

Some Help Please.
I received a letter from HMRC on the 3rd of October Titled “Do I have to pay the High Income benefit charge”
The details of this came as fair surprise as I was unaware of this charge , and have since discovered I’m not the only one to be caught out.
My children were born before the law change , My pays wasn’t above the threshold when the Law came in.

Having spoken with HMRC they want me to provide them with my income details going back to 2012 (P60 and P11D) Surly they know this as I’m PAYE ?
Ive spent a good few days hunting round to find all my pay info and with out going into exact numbers , I got made redundant in 2013-2014 tax year and my redundancy pushed me over the 50k limit , I then started a new Job which with overtime and the car benefit has seem me earn over the 50k limit for each year since.

This now looks like I am going to be landed with a huge tax bill !

What I fail to understand is why HMRC haven’t contacted me before now, if id had this letter in 2013 would have paid the tax back and stopped claiming Child Benefit.

For HMRC to leave it 6 years seems ridiculous and is looking like it’s going to have a serious financial impact.

I’ve never even been asked to fill out a self assessment form.

Is it right that they can expect to go back 6/7 years ? when I was never informed in the first place ?

Do I need professional help ?

Or do I disclose my earnings and pay whatever they decide to charge me?

Regard Marcus

[darthblingbling]

It is a bit unfair that this wasn't flagged earlier as it's a straightforward check assuming government systems communicate with each other efficiently, but their arguement is that it's a self assessment tax system so you should have full knowledge of the UK tax system when assessing your income and it's not HMRC's job to manage your tax affairs.

Was the letter a mass letter sent to many to see who comes forward, or have they specifically opened an enquiry?

[Marcus001]

Thanks for the reply.
The letter was specifically addressed to me.
It starts with a bit about “Do I have to pay” then proceeds with “What you need to do to see if you need to pay the charge for 2017/2018 and or any other tax year to 2012/2013.”

I phone the HMRC number on the letter and asked about what to do , and she said I needed my P60 and P11D details back to 2012 I had to disclose this to them, and then they would check , I asked what are they are checking it against ? if they already have the detail to check against why am I doing this ? He reply was that its my responsibillity , even though ive never done anything like this before , If i was self employed or a contractor i could understand this, but as a PAYE (always) i Incorrectly ussumed this was all done by either my employer of the HMRC.

It all seems as you say Unfair.

[darthblingbling]

Essentially for every £100 of taxable income above £50k in a tax year your child benefit is tapered by 1%. If you have taxable income above £60k it is therefore fully tapered. This is usually assessed on the parent with the higher income and HMRC would have expected that parent to file a tax return to declare how much child benefit needs to be reclaimed.

I would say that the time limit in your circumstances is the 6 previous tax years as you have only been 'careless'.

If your employment income is your only taxable income for all tax years concerned then I would look at your p60 and p11d for each tax year to determine what the tapering percentage is, then obviously apply that to the child benefit claimed in that year to see what needs to be repaid. Rough estimate assuming 2 children and income above £60k is that you will need to repay at least £12k, plus interest. Could be less if you had income less than £60k in any year.

Penalties may also likely apply for late payment of tax, failure to disclose and late tax returns. This is where a good tax professional can help with the disclosure so that these are mitigated to their lowest possible level. In some cases I've seen good tax professionals successfully argue reasonable care so HMRC only went back 4 years. Overall their services may pay for itself as opposed to doing this all yourself, but do some work first to get an idea of your likely exposure.

[robbob]

It's probably grasping at straws but have you made any pension payments deducted from your "net" salary that you may not have claimed higher rate relief on?
This would be any "employees deductions" on your payslips that did not reduce your taxable pay for that month.
Note if you were given tax relief for such payments the claim would show up in either your tax code or year end p800 calculation.

Note pension payments by you (that are not deductions that reduce your taxable pay) would not only result in 25% tax refund of contributions made by you - but they also reduce your income for the child benefit calculations possibly reducing the extra tax charge on top.

A similar principle applies for gift aid donations.

Other straws available are.
Professional subscriptions or job expenses you were not fully reimbursed tax free. Example would be using your personal car for work mileage if you got paid less than 45p mile (first 10k miles)
Again that would have to be claimable items not included on p800 or tax code during year.
Note this rule only applies if the children live in the same household as you.

Penalties may also likely apply for late payment of tax, failure to disclose and late tax returns. This is where a good tax professional can help with the disclosure so that these are mitigated to their lowest possible level. In some cases I've seen good tax professionals successfully argue reasonable care so HMRC only went back 4 years. Overall their services may pay for itself as opposed to doing this all yourself, but do some work first to get an idea of your likely exposure.

Note we should point out that hmrc have already cancelled many such penalties - this being the case i would not expect them to default to their normal situation where they automatically play hard ball in this regard - so it may or may or may not be straightforward to get some of the penalties overturned - note as you didn't know on day one what to do and hmrc are now agreeing that was a reasonable excuse back then its worth arguing that that reasonable excuse extends up to the time you found out as you weren't aware that you had to go looking any time later so the original excuse is still valid. The excuse would end once you were made aware of the situation.

https://www.mirror.co.uk/money/6000-parents-sent-child-benefit-16267826