Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.
UK revenue agency HM Revenue & Customs (HMRC) was ordered to pay back tax charges assessed on a parent under its high income child benefit charge by a tribunal last week.
Jason Wilkes took HMRC to court alleging he was chased by the agency in pursuit of £4,000 in child benefits his wife received between 2014 and 2017. Wilkes says the controversial government program, the high income child benefit charge (HICBC), enacted to extract benefit payments from high earning parents led to the unexpected charge and additional penalties for underpayment.
The HICBC claws back child benefit payments from couples if one or the other parent makes more than £50,000 a year. HMRC assesses the charge on the parent that earns more than the income limit, not the person receiving the benefit.
Critics say that the implementation of the HICBC has led to unfair results, including partners who lived with those receiving child benefits hounded by HMRC for thousands of pounds even after the relationship has ended, reports The Guardian.
Indeed, Wilkes argued that he was unaware of the HICBC charge for previous years and that the tax agency used its discovery powers unfairly to hit him with thousands in tax payments and penalties.
A lower court agreed with Wilkes and, in a recent decision, the upper tribunal also determined that HMRC wrongly assessed the high income child benefit charge.
In light of the tribunal’s decision, HMRC should refund the taxes and penalties it assessed under the high income benefit charge, say thousands of parents who claim they were unexpectedly hit with demands by the agency, reports The Guardian.
“The terrible design of the HICBC left many of the affected taxpayers – in particular those who paid tax by PAYE – simply unaware of it”, a lawyer representing the plaintiff told reporters. The lawyer noted that other taxpayers will need to wait to see how HMRC will respond to the decision before they proceed.
“It could accept the tribunal decision but not contact those affected, in which case each person would have bring their own case”, he continued. “Most people will not be able to assess their next steps until HMRC decides how to respond”.
HMRC representatives told The Guardian that the tribunal’s decision changes nothing for other taxpayers.
“We are considering the upper tribunal’s decision”, stated the agency. “All of the taxpayers who have been assessed are still liable to the HICBC, and nothing in the tribunal’s judgment calls that into question.”
Tax experts say that the case may have far reaching ramifications for parents facing HICBC charges.
“HMRC could now see individuals making a claim to recover tax which was wrongly assessed – it’s uncertain how successful such claims would be and HMRC are likely to resist them on the basis that the position was accepted and agreed, but HMRC are now in a difficult position”, Stefanie Tremain, a director at the tax advisers Blick Rothenberg told The Guardian.
Have you been assessed taxes and fees by HMRC under the high income child benefit charge? Tell us about your experience below.
The plaintiff is represented by James Austen of Collyer Bristow.
Don’t Miss Out!
Check out our list of Class Action Lawsuits and Class Action Settlements you may qualify to join!
Read About More Class Action Lawsuits & Class Action Settlements:
