Tribunal Rules on Validity of Discovery Assessments and Reasonable Excuse in HICBC Case

Citation: [2024] UKFTT 12 (TC)
Judgment on


In the case of Neil Wills v The Commissioners for HMRC, the First-tier Tribunal (Tax Chamber) examined the High Income Child Benefit Charge (HICBC) and associated penalties. Mr. Wills appealed against the assessments and penalties for failing to notify his chargeability under the Taxes Management Act 1970 (TMA 1970). The Tribunal analyzed the validity of discovery assessments, whether the appellant had a reasonable excuse for failing to notify chargeability, and if proper penalty assessments were made pursuant to Schedule 41 of the Finance Act 2008. This article will dissect the key legal principles applied and elucidate on how they directly relate to the Tribunal’s decision.

Key Facts

Mr. Wills was assessed for the HICBC for tax years 2013/14 to 2019/20 inclusive and faced penalties for not notifying HMRC of his chargeability. He claimed that he only became aware of his obligations after HMRC made contact in February 2021. The Tribunal needed to determine the validity and timeliness of the discovery assessments, and whether Mr. Wills had a reasonable excuse for his failure to notify, which would impact the penalty assessments.

Discovery Assessments

The crux of the case lay in whether HMRC had the right to issue discovery assessments for the HICBC after the deadline. This required an examination of the newly enacted s97 Finance Act 2022, following the precedent set in HMRC v Wilkes [2022] EWCA Civ 1612, concerning the retrospective effect of discovery assessment amendments.

Reasonable Excuse

The Tribunal adopted the test of “reasonable excuse,” drawing from Perrin v HMRC [2018] UKUT 156 and The Clean Car Co Ltd v C&E Commissioners [1991] VATTR 234, assessing whether Mr. Wills’ ignorance of the HICBC could reasonably excuse his failure to notify HMRC.


The Tribunal had to decide whether penalties issued under Schedule 41 were valid and if there was a reasonable excuse that would abrogate the penalties. It examined the case HMRC v Robertson [2019] UKUT 0202 (TCC), which determined HMRC’s ability to assess penalties independently of whether a tax assessment is validly made.


The Tribunal’s analysis led to the following conclusions:

  1. The assessments for tax years 2016/17 to 2019/20 were within the time limits and thus valid, as were penalties for those years.
  2. For tax years 2013/14 to 2015/16, the assessments were out of time because Mr. Wills had a reasonable excuse for his ignorance, constituting a failure to notify without unreasonable delay, thus invalidating assessments for these years.
  3. Penalties for those years that the assessments were deemed out of time were canceled based on the same reasonable excuse applied to the earlier years.


The case of Neil Wills v The Commissioners for HMRC revolves around the timely notification of tax liabilities in the context of the HICBC and illustrates that ignorance of tax obligations can constitute a “reasonable excuse” if deemed objectively reasonable. The decision reflects the significance of HMRC’s responsibility to notify taxpayers and the implications for assessments and penalties when said notices do not reach the taxpayer. The retrospective amendment of the law concerning discovery assessments through the Finance Act 2022 and its limitations detailed in Wilkes played a pivotal role in protecting some of the assessments issued by HMRC. Lastly, the Tribunal’s cancellation of penalties based on the same grounds as the out-of-time assessments is indicative of the fairness principle at the heart of tax adjudication.