Darren Dunckley v The Commissioners for HMRC
[2023] UKFTT 707 (TC)
Thomas James Niewiarowski v The Commissioners for HMRC
14 July 2023
[2023] UKFTT 649 (TC)
First-tier Tribunal
Someone didn't pay a tax on child benefit because they didn't know about it. The government said they should have known because it was publicized, and because their income was high enough to trigger the tax. The court agreed with the government and said they had to pay.
Key Facts
- •Appeal against discovery assessments (£11,950) under section 29 Taxes Management Act 1970 (TMA) and penalty assessments (£909.60) under Schedule 41 Finance Act 2008 (FA08) for High Income Child Benefit Charge (HICBC) for tax years 2012/13 to 2019/20.
- •Appellant's employment income was taxed under PAYE; wife claimed child benefit since 2008.
- •Appellant first learned of HICBC liability in January 2021 and subsequently disclosed the information.
- •Appeal to HMRC was made on 30 April 2021, before the June 30th deadline stipulated in section 97 FA 2022.
- •Appellant did not raise the Wilkes argument (concerning the invalidity of using section 29(1)(a) TMA for HICBC assessments) in his initial appeal to HMRC.
- •Appellant argued reasonable excuse for non-notification due to lack of awareness of HICBC and reliance on PAYE.
- •Appellant's income exceeded the HICBC threshold in all relevant years.
Legal Principles
Section 29(1)(a) TMA 1970 (pre-FA 2022 amendment): Discovery assessments could not be made for HICBC as it was not considered 'income' which ought to have been assessed to income tax (as per Wilkes case law).
Wilkes v HMRC case law (FTT, UT, CA)
Section 97 FA 2022 amended section 29(1)(a) TMA 1970 to allow discovery assessments for HICBC, with retrospective effect subject to exceptions for appeals made before 30 June 2021 that raised the Wilkes issue.
Section 97 FA 2022
Reasonable excuse for penalty: The standard is that of a prudent and reasonable taxpayer in the appellant's position.
David Collis v HMRC [2011] UKFTT 588 (TC)
Assessing reasonable excuse: A four-step process involving establishing facts, proving them, deciding if they constitute an objectively reasonable excuse, and considering the remedy’s timeliness.
Perrin v HMRC [2018] UKUT 156 (TCC)
Taxpayer's obligation to notify liability to HICBC within six months of the tax year end.
HICBC legislation
Outcomes
Appeal dismissed.
The assessments were protected assessments under section 97 FA 2022 because the Wilkes issue wasn’t raised in the initial appeal to HMRC before 30 June 2021. The appellant was liable for HICBC, and no reasonable excuse for failing to notify liability was established.
Discovery assessments upheld.
Appellant's income exceeded the HICBC threshold in all relevant years, and section 97 FA 2022 retrospectively validated the assessments.
Penalties upheld.
No reasonable excuse was found for the failure to notify liability to HICBC, considering the publicity campaign and the appellant’s income consistently exceeding the threshold.