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“ACT NOW!” Says HM Revenue & Customs

  • 25th September 2014

“ACT NOW!” Says HM Revenue & Customs

..OR with their latest offering, has the Revenue displayed a case of “Throwing Out the Baby with the Bath Water”?

HM Revenue & Customs “Warning” letters on the 2012/13 High Income Child Benefit Charge target not only the wrongdoers, but also those taxpayers who had acted correctly.

A proportion of our clients have recently received correspondence from HM Revenue & Customs which alleges that they failed to declare the High Income Child Benefit Charge (“HICBC”) on their 2012/13 Self-Assessment Tax Returns. The “HICBC” is applicable to those taxpayers who have adjusted income which exceeds £50,000.

In accordance with the tone set by all such computer generated standardised correspondence from HM Revenue & Customs, this latest offering alludes to a veiled blanket threat to everyone and their prevalent use of RED wording only serves to frighten those taxpayers who haven’t actually done anything wrong.  The gist of these warning letters from HM Revenue & Customs orders the recipient to amend their 2012/13 Tax Return and pay the “HICBC” without further delay.

Whilst I am sure that someone, somewhere will have made this mistake and omitted the “HICBC” from their 2012/13 Return, in each particular instance across our client base, the original submission of the 2012/13 Tax Return was wholly correct. We have subsequently decided that HM Revenue & Customs have seemingly cross referenced the Child Health Benefit database with their own records and have written to those taxpayers with reported income in exceeding £50,000 for 2012/13, yet have ignored other pertinent facts, including:

  • First child wasn’t born until after the end of the 2012/13 tax year! (Honestly!)
  • The taxpayer’s adjusted income for 2012/13 actually falls below the £50,000 threshold, after adjusting for other entries on the Tax Return. (Actual income which may exceed £50,000 is subsequently reduced by other factors, for example NHS superannuation contributions, Gift Aid donations or other business trading losses, before arriving at the adjusted net income figure for the purposes of calculating whether the “HICBC” applies).
  • The household also has a higher earner who had already declared the “HICBC” on
    their own Self-Assessment Tax Return for 2012/13.

Any medical practitioners in receipt of such a letter are advised to contact our tax team for expert advice on whether they do indeed need to “ACT NOW!”

Who writes this?

David Elliot

David Elliot

Tax Director
Find out more about David
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