Thomas James Niewiarowski v The Commissioners for HMRC
[2023] UKFTT 649 (TC)
Claire O'Hare v The Commissioners for HMRC
16 October 2024
[2024] UKFTT 921 (TC)
First-tier Tribunal
A woman didn't pay a tax on child benefit (HICBC) because she didn't know about it. The tax office (HMRC) tried to collect the back taxes. A judge decided that the woman had to pay because HMRC had followed the rules, even though she was unaware of the HICBC, and the delay in discovering her non-compliance didn't change that.
Key Facts
- •Mrs. O'Hare appealed against failure to notify penalties and discovery assessments for unpaid Higher Income Child Benefit Charge (HICBC) for 2015/16 to 2019/20.
- •HMRC initially accepted a reasonable excuse for the failure to notify, removing penalties and early assessments.
- •Remaining appeals concerned discovery assessments totaling £3,452 for 2017/18 to 2019/20.
- •Mrs. O'Hare claimed child benefit, her income exceeded the HICBC threshold, and she didn't file self-assessment returns or notify HICBC liability.
- •HMRC issued a discovery assessment in May 2021.
- •The appeal was made before the June 30, 2021, cutoff for protected assessments under the Finance Act 2022.
Legal Principles
HICBC is imposed under section 681B of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).
ITEPA 2003, s 681B
Prior to FA 2022, HICBC could not be assessed under section 29(1)(a) TMA 1970, as per HMRC v Wilkes [2022] EWCA Civ 1612.
Section 29(1)(a) TMA 1970; HMRC v Wilkes [2022] EWCA Civ 1612
FA 2022 amended section 29(1)(a) TMA 1970, allowing discovery assessments for HICBC with retrospective effect, but only for 'protected assessments'.
Section 97, Finance Act 2022
A discovery assessment is not a protected assessment if an appeal was made before 30 June 2021 and concerned the Wilkes issue, or if the appeal was temporarily paused before 27 October 2021 due to that issue.
Section 97(5), (6), (8) FA 2022
Time limits for raising assessments are set out in section 34 TMA 1970.
Section 34 TMA 1970
Outcomes
Appeals against failure to notify penalties and discovery assessments for 2015/16 and 2016/17 were allowed.
HMRC accepted Mrs. O'Hare had a reasonable excuse for the failure to notify.
Appeals against discovery assessments for 2017/18, 2018/19, and 2019/20 were dismissed.
The assessments were deemed 'protected assessments' under FA 2022, as the appeal wasn't temporarily paused, and HMRC's discovery of tax insufficiency was reasonable. Arguments on fairness and timeliness of HMRC's contact were irrelevant to the validity of assessments.