Darren Dunckley v The Commissioners for HMRC
[2023] UKFTT 707 (TC)
Waseem Shahid v The Commissioners for HMRC
18 August 2023
[2023] UKFTT 716 (TC)
First-tier Tribunal
A man didn't know about a tax rule and got fined. He didn't read a letter explaining the rule, but when he *did* find out, he told the tax office right away. The judge decided that because he acted quickly after learning about the rule, he didn't deserve the fine.
Key Facts
- •Appellant assessed to High Income Child Benefit Charge (HICBC) for four tax years (2014/15-2017/18), with penalties for failing to notify chargeability.
- •Appellant accepted tax assessments but appealed penalties (£1,729 total).
- •Appellant was not in the self-assessment regime; did not receive or read HMRC's letter SA252 (sent August 17, 2013).
- •HMRC's records show appellant's adjusted net income exceeded £50,000 each year.
- •Appellant's spouse received Child Benefit from July 2014, but the claim form warned about HICBC if either partner's income exceeded £50,000.
- •Appellant didn't see the Child Benefit claim forms.
- •Appellant received a nudge letter on November 14, 2019 and contacted HMRC promptly.
- •Appellant accepted HICBC liability in May 2021.
- •Appellant's spouse was unaware of his actual income (above £50,000), believing it to be £42,000.
- •Appellant paid household bills; separate accounts for him and his wife.
Legal Principles
Reasonable excuse for failing to notify chargeability under section 7 TMA, considering the taxpayer's attributes, situation, and whether their actions were objectively reasonable.
Christine Perrin v HMRC [2018] UKUT 156 and The Clean Car Co Ltd v C&E Commissioners [1991] VATTR 234
Ignorance of the law can be a reasonable excuse in certain circumstances.
Christine Perrin v HMRC [2018] UKUT 156
HICBC liability arises if adjusted net income exceeds £50,000, partner's income is lower, and child benefit is received (section 681B Income Tax (Earnings and Pensions) Act 2003).
Section 681B Income Tax (Earnings and Pensions) Act 2003
Penalties for failing to notify under section 7 TMA are governed by Schedule 41 Finance Act 2008, with potential reductions for special circumstances or reasonable excuse.
Schedule 41 Finance Act 2008
Outcomes
Appeal allowed.
Appellant had a reasonable excuse due to ignorance of the HICBC criteria, despite receiving letter SA252 (which he didn't read), and remedied the failure without unreasonable delay after receiving the nudge letter.