High Income Child Benefit Charge - Striped Leopard Accountancy

High Income Child Benefit Charge Letters

HMRC Getting It Wrong Again?

Prepare yourselves for this, it may come as a bit of a shock…

A few of my clients have forwarded me letters from HMRC which say:

YOU NEED TO ACT NOW! We have checked your tax return for 2012 to 2013 against Child Benefit records. This shows that you or your partner continued to get Child Benefit after 7 January 2013.

Unfortunately, and here’s the shocking part, HMRC are wrong! Gasps of surprise all round please.

Basically, in all the cases I have seen, each letter was sent to the spouse of someone who was earning over £50,000 and it was, in fact, the spouse who paid the High Income Child Benefit Charge, not the person to whom the letter is addressed.

The reason for the letters is that HMRC are clearly unable to cross check the tax return with that of the person’s spouse. However, they were able to cross check the tax return against child benefit records. Read into that what you will!

Along with the letters being incorrect there are a number of issues with HMRC’s approach:

The letters were not copied to agents so if you have received one of these letters, the onus is on you to forward it to your accountant

Some people will receive the letter and arrive at the conclusion that their accountant is wrong, this isn’t great for my profession. Personally, I always educate my clients on the limitations of HMRC so that they know to adopt a healthy level of scepticism for each communication received from them

If you do not have an accountant who provides you with a fixed fee but instead bills you on a time basis then you may be charged by your accountant if they decide to respond to the letter

There are two options to resolve this, either contact HMRC and let them know that they are not correct or just ignore them. You may receive another letter about it in the future or they may finally display some level of competency and decide to look into it a bit further.

Then again, even if you let them know that they got it wrong it doesn’t guarantee that they won’t write to you again anyway.

Have you received a letter about this? If so I’d love to hear about it.

Vikki

PS Did you know that Striped Leopard do not charge extra for communicating with HMRC on your behalf. To hear more about the benefits of fixed fees then please contact us.