Jonathan Harwood v The Commissioners for HMRC
[2024] UKFTT 46 (TC)
Paul Burchett v The Commissioners for HMRC
2 February 2024
[2024] UKFTT 121 (TC)
First-tier Tribunal
A man was charged back taxes for not paying the High Income Child Benefit Charge (HICBC). He said he didn't know about it. The judge agreed he had a good excuse for not paying on time and cancelled the back taxes and penalties.
Key Facts
- •Mr. Burchett was assessed HICBC for tax years 2012/13 to 2018/19 and penalties for non-notification (s7 TMA 1970).
- •HMRC issued discovery assessments under s29 TMA 1970.
- •Mr. Burchett claimed a reasonable excuse for non-notification.
- •The assessments for 2013/14 were cancelled by HMRC.
- •Mr. Burchett appealed to HMRC, then requested a review.
- •The Wilkes case (concerning the validity of discovery assessments for HICBC) was relevant.
- •s97 FA 2022 retrospectively amended s29 TMA 1970, impacting time limits and validity of assessments.
- •HMRC claimed they sent a SA252 in 2013, but Mr. Burchett denied receiving it.
Legal Principles
High Income Child Benefit Charge (HICBC) liability (s681B Income Tax (Earnings and Pensions) Act 2003).
Income Tax (Earnings and Pensions) Act 2003
Discovery assessments under s29 TMA 1970; HMRC's burden of proof.
Taxes Management Act 1970
Wilkes case: Discovery assessments for HICBC invalid before s97 FA 2022.
HMRC v Wilkes [2020] UKUT 0150 (TCC) and [2022] EWCA Civ 1612
s97 FA 2022 amended s29 TMA 1970, creating 'relevant protected assessments'.
Finance Act 2022
Time limits for discovery assessments (s34, s36 TMA 1970).
Taxes Management Act 1970
Penalties for non-notification (Schedule 41 Finance Act 2008).
Schedule 41 Finance Act 2008
Reasonable excuse defence for penalties (s118(2) TMA 1970, Perrin v HMRC [2018] UKUT 156, The Clean Car Co Ltd v C&E Commissioners [1991] VATTR 234, Archer v HMRC [2023] EWCA Civ 626).
Taxes Management Act 1970, case law
Appeal process under s49A-49I TMA 1970.
Taxes Management Act 1970
Outcomes
Appeal allowed for assessments for 2012/13, 2014/15, and 2015/16.
Assessments were out of time; Mr. Burchett had a reasonable excuse for non-notification under s118(2) TMA 1970.
Appeal allowed for penalties for 2012/13 and 2014/15 to 2017/18.
Mr. Burchett had a reasonable excuse for non-notification.
Appeal rejected for assessments for 2016/17 to 2018/19.
No appeal was made to HMRC for these years; the Tribunal lacked jurisdiction.