HMRC loses case on the High Income Child Benefit Charge

05 July 2021

HMRC has lost a Tribunal case that centred on the High Income Child Benefit Charge (HICBC).

For individuals who earn over £50,100 in a tax year, there is the requirement to pay part of the child benefit amount received back via a tax return at tax year end. This amounts to 1% of every £100 earned over £50,100, and anyone earning more than £60,000 is required to pay the full amount back each year.

In the case in question, father, Jason Wilkes contested the backdated HICBC bill he was issued relating to child benefit payments he had received back in 2014. He was unaware of the change made to the law in 2013 relating to the repayment of the benefit for those earning more than £50,100. HMRC, however, insisted that it made news of the changes widely known during the time in which they came into force.

Mr. Wilkes was contacted back in 2018 to advise that he may be liable to pay the HICBC, at which point Wilkes confirmed that he was. He was subsequently issued with Discovery Assessments for underpaid tax in previous years. This allowed HMRC to reopen closed periods and to issue bills for previous years.

Samantha Wilkes, Jason Wilkes’ wife, appealed against the assessment to the HICBC in the First-tier Tribunal. The Upper Tribunal stated that HMRC cannot issue a HICBC via Discovery Assessments where the individual being charged did not file a self-assessment tax return.  This means that any Discovery Assessments provided in the same circumstances could potentially be disputed.

There is a reminder that even if individuals earn over £60,000 per year, there could still be a reason to claim child benefit. Each year a claim is made can be classed as a “qualifying year” towards someone’s state pension, for the person claiming or the person looking after the child.


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