New HMRC powers of discovery will be retrospective
The government has confirmed that the Finance Bill will include changes to discovery assessments, allowing HMRC to recoup unpaid high income child benefit charges going back almost ten years. What’s the full story?
The unpopular high-income child benefit charge (HICBC) was introduced in 2013. Despite HMRC administering child benefit payments, it is still finding taxpayers that have not declared the benefit in previous years. Once the Finance Bill is enacted, HMRC will be able to open discovery assessments to collect any unpaid tax charges from as far back as 2013. However, the change will not apply to those who have already appealed against such assessments.
This addition to the Finance Bill is a result of the Upper Tribunal decision in Wilkes v HMRC, which found that HMRC did not have the power to impose the HICBC by means of discovery assessment as there was no income which ought to have been assessed. As a result, Mr Wilkes did not have to pay the tax charges. Individuals with income over £50,000, where either they or their partner receives child benefit, could soon receive a large unexpected tax bill from several years ago.
Related Topics
-
Selling spare items to your company
You’re short of cash but if you use the traditional methods to take more money out of your company you’ll pay higher rate taxes. Is there another way to extract profits without paying income tax or NI?
-
No such thing as a (tax) free lunch?
You run a small consultancy company and treat your staff to lunch in the office once a week. Your bookkeeper says it’s a taxable benefit in kind because staff lunches are only exempt if they are provided in a workplace canteen. Is this correct?
-
Judge criticises use of fabricated AI-generated cases in HMRC appeal
A tax tribunal judge has criticised the use of apparently fabricated case references generated by artificial intelligence in an appeal against HMRC. The incident highlights growing concerns over the use of AI tools in legal and tax proceedings. What happened?