David Thompson v The Commissioners for HMRC
[2024] UKFTT 375 (TC)
Andrew Newall v The Commissioners for HMRC
11 December 2023
[2024] UKFTT 47 (TC)
First-tier Tribunal
Someone was assessed for back taxes related to child benefit and penalties for not reporting it. The court said he owed the taxes because he met the legal requirements. They also said he wasn't excused from the penalties for late reporting even though he said he didn't know about the rules, because he didn't act after HMRC contacted him about it.
Key Facts
- •Appellant assessed to High Income Child Benefit Charge (HICBC) for 2017/18 to 2019/20, totaling £2,248, plus £604.08 penalties for late notification.
- •Appellant's adjusted net income exceeded £50,000 in each year.
- •Appellant's wife received child benefit.
- •Appellant claimed unawareness of HICBC and continued child benefit payments.
- •HMRC sent a SA252 letter in 2013 (returned undelivered), a 'nudge' letter in November 2019, and a final reminder in December 2019.
- •HMRC discovered the tax insufficiency on 28 April 2021 and issued assessments on 30 June 2021.
- •Appellant appealed on 22 July 2021.
Legal Principles
HICBC liability requirements under section 681B Income Tax (Earnings and Pensions) Act 2003.
Income Tax (Earnings and Pensions) Act 2003, section 681B
HMRC's discovery assessment powers under section 29 TMA, amended by section 97 Finance Act 2022 for HICBC.
Taxes Management Act 1970, section 29; Finance Act 2022, section 97
Notification requirements under section 7 TMA and penalties under Schedule 41 Finance Act 2008 for non-notification.
Taxes Management Act 1970, section 7; Finance Act 2008, Schedule 41
Reasonable excuse defence for penalties under Schedule 41, paragraph 20; objective test from *Clean Car Co Ltd v C&E Commissioners* and *Perrin v HMRC*.
Finance Act 2008, Schedule 41, paragraph 20; *Clean Car Co Ltd v C&E Commissioners* [1991] VATTR 234; *Christine Perrin v HMRC* [2018] UKUT 156
Outcomes
Appeal against HICBC assessments dismissed.
Appellant met the statutory criteria for HICBC liability; the assessments were within the time limits; the appeal was subject to the retrospective amendment in Section 97.
Appeal against penalty assessments dismissed.
Appellant had no reasonable excuse for failing to notify after receiving the nudge/reminder letters in late 2019; failure to engage with HMRC within a reasonable timeframe after receiving notice negated any reasonable excuse based on ignorance of the law.