Darren Dunckley v The Commissioners for HMRC
[2023] UKFTT 707 (TC)
David Thompson v The Commissioners for HMRC
9 May 2024
[2024] UKFTT 375 (TC)
First-tier Tribunal
Someone didn't pay extra tax on their child benefit because they earned over £50,000. They said they didn't know they had to, but the tax office sent them letters reminding them. The court said they should have known and had to pay the tax and fines.
Key Facts
- •Appeal concerning High Income Child Benefit Charge (HICBC) assessments for 2016/17 to 2019/20, totaling £5,202, plus penalties of £902.80.
- •Appellant was an employee with company car and fuel allowance, exceeding the £50,000 adjusted net income threshold.
- •HMRC issued 'nudge' and 'final reminder' letters in 2019, which the appellant claims not to have received.
- •Appellant's spouse stopped claiming child benefit in January 2020.
- •HMRC discovered the tax loss on May 17, 2021, but the assessments were issued by a different officer on January 11, 2023.
- •Appellant appealed against both assessments and penalties.
Legal Principles
Liability to HICBC 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.
Taxes Management Act 1970, section 29; Finance Act 2022, section 97
Time limits for discovery assessments under section 34(1) and 36(1A) TMA; impact of section 118(2) TMA on the 20-year limit.
Taxes Management Act 1970, sections 34(1), 36(1A), 118(2)
Penalties for failure to notify chargeability under section 7 TMA, as per Schedule 41 Finance Act 2008.
Taxes Management Act 1970, section 7; Schedule 41 Finance Act 2008
Reasonable excuse defence against penalties under paragraph 20 Schedule 41; relevant principles from Perrin [2018] UKUT 156 and Clean Car Co [1991] VATTR 234.
Schedule 41 Finance Act 2008, paragraph 20; Perrin [2018] UKUT 156; Clean Car Co [1991] VATTR 234
Assessment validity despite different officers involved in discovery and assessment; consideration of HMRC v Tooth [2021] UKSC 17 and section 2(4) Commissioners of Revenue and Customs Act 2005.
HMRC v Tooth [2021] UKSC 17; Commissioners of Revenue and Customs Act 2005, section 2(4)
Presumption of regularity of postal service (section 7 Interpretation Act 1978).
Interpretation Act 1978, section 7
Outcomes
Appeal against HICBC assessments dismissed.
Assessments were validly raised and issued following a timely discovery; appellant failed to demonstrate an overcharge.
Appeal against penalties dismissed.
Appellant failed to establish a reasonable excuse for not notifying his liability to HICBC; receipt of HMRC letters, and subsequent inaction, negated any potential reasonable excuse.