Scott Macarthur v The Commissioners for HMRC
[2023] UKFTT 997 (TC)
Rabina Kajla v The Commissioners for HMRC
7 March 2024
[2024] UKFTT 193 (TC)
First-tier Tribunal
Someone got a big tax bill for not paying a child benefit tax. They said they didn't know about it because they never got a letter telling them. The judge believed them and cancelled the extra fine, but they still had to pay the main tax bill.
Key Facts
- •Appellant assessed to High Income Child Benefit Charge (HICBC) for 2018/19 and 2019/20, totaling £2,181, plus a £257.40 penalty for failing to notify.
- •Appellant received child benefit since 1997, employed and not required to file self-assessment returns.
- •HMRC issued a 'nudge' letter in December 2019, which the appellant claims not to have received.
- •HMRC discovered the liability in February 2021 and issued assessments in April 2021.
- •Appellant appealed against the penalty in April 2021 and later against the assessments in January 2022.
- •Appellant claimed a reasonable excuse due to non-receipt of the nudge letter and lack of awareness of the HICBC.
Legal Principles
Liability for HICBC
Income Tax (Earnings and Pensions) Act 2003, section 681B
Discovery assessments under TMA 1970, section 29 (as amended by Finance Act 2022, section 97)
Taxes Management Act 1970, section 29; Finance Act 2022, section 97
HMRC's power to raise HICBC discovery assessments
TMA 1970, sections 34(1), 36(1A)
Penalties for failure to notify under TMA 1970, section 7
Taxes Management Act 1970, section 7; Schedule 41 Finance Act 2008
Reasonable excuse defence for penalties
Schedule 41, paragraph 20, Finance Act 2008; Upper Tribunal decision in Christine Perrin v HMRC [2018] UKUT 156; The Clean Car Co Ltd v C&E Commissioners [1991] VATTR 234; William Archer v HMRC [2023] EWCA Civ 626
Service of documents
Interpretation Act 1978, section 7
Outcomes
Appeal against HICBC assessments dismissed
Assessments were valid and timely.
Appeal against penalty allowed
Appellant had a reasonable excuse due to non-receipt of the nudge letter, leading to ignorance of the HICBC liability.