HM Revenue & Customs (HMRC) has announced that it will refund taxpayers who did not register for the High Income Child Benefit Charge (HICBC) providing they have a “reasonable excuse” for not doing so.
It comes after the tax regulator revealed that it was reviewing HICBC cases where a “Failure to Notify” penalty was issued.
Parents may have to pay the HICBC if they have an individual income of over £50,000 and either they or their partner receives Child Benefit, or someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep.
The charge is designed to restrict higher earners from receiving additional benefits, while also helping non-earners earn credits towards their State Pension.
In November last year, however, HMRC announced that it would review cases for the tax years 2013/14, 2014/15 and 2015/16 where customers did not register for the charge.
HMRC said that, during these years, it sent ‘Failure to Notify’ penalties to taxpayers who did not register but failed to consider whether individuals had a reasonable excuse for not meeting their tax obligations.
This includes families who made a claim for Child Benefit before the HICBC was introduced, and where one partner’s income subsequently increased to over £50,000 in or after the 2013 to 2014 tax year. This is because the higher earner in a household who pays the charge may not be the same person claiming Child Benefit on behalf of the household.
The regulator said it has reviewed 35,000 cases where a penalty had been charged and cancelled the charges of more than 6,000 customers.
Commenting on the report, an HMRC spokesperson said: “HMRC is listening to customers and stakeholders, and reviewing our approach to HICBC to ensure we are treating everyone fairly.
“Customers do not need to ask for a penalty refund or contact HMRC. We will issue the refunds, where due, over the next six months.”