Key Facts
- •John Sharp appealed discovery assessments and penalties for High Income Child Benefit Charge (HICBC) for tax years 2014/15 to 2017/18.
- •Sharp's spouse claimed child benefit; his income exceeded the £50,000 threshold for HICBC liability.
- •Sharp did not file self-assessment returns during the years in question, but had previously declared and paid HICBC for 2013/14 and 2018/19.
- •HMRC issued a 'nudge' letter in 2019, which Sharp claims not to have received.
- •HMRC raised discovery assessments in April 2021 and penalties in May 2021 for non-notification of HICBC liability under s7 TMA.
- •Sharp's appeal was made before the retrospective amendment to s29 TMA 1970 by the Finance Act 2022.
Legal Principles
Discovery assessments for HICBC under s29 TMA 1970 were initially invalid due to the interpretation in HMRC v Wilkes [2022] EWCA Civ 1612.
HMRC v Wilkes [2022] EWCA Civ 1612
Section 29 TMA 1970 was retrospectively amended by s97 FA 2022 to allow discovery assessments for HICBC.
s97 Finance Act 2022
Penalties for failure to notify HICBC liability under s7 TMA are not affected by the retrospective amendment to s29 TMA.
s7 TMA 1970, Schedule 41 Finance Act 2008
A reasonable excuse for non-notification must be both genuine and objectively reasonable, considering the taxpayer's circumstances (Perrin v HMRC [2018] UKUT 156 (TCC)).
Perrin v HMRC [2018] UKUT 156 (TCC)
Ignorance of the law can, in certain circumstances, constitute a reasonable excuse.
Perrin v HMRC [2018] UKUT 156 (TCC), Neal v Customs and Excise Commissioners [1988] STC 131, The Clean Car Co Ltd v Custom and Excise Commissioners [1991] VATTR 234
Article 7 ECHR (no punishment without law) was considered but not engaged, as the obligation to notify under s7 TMA was not imposed retrospectively.
Article 7, European Convention on Human Rights
Outcomes
Appeal dismissed.
Sharp was liable for HICBC as his income exceeded the threshold. The retrospective amendment to s29 TMA validated the discovery assessments. He did not have a reasonable excuse for failing to notify his HICBC liability under s7 TMA.