HMRC identifies discrepancies in High-Income Child Benefit Restriction 2021/22 returns
Posted on 16th November 2023
What’s this about?
Since 2nd October 2023, tax professionals and accountants have been sent letters from the Agent Compliance Team (ACT) at HMRC, alerting them to inaccuracies in their clients’ reporting of liability for the high-income child benefit charge.
The HMRC communication highlights potential self-assessment errors in tax returns for the 2021-22 financial year, impacting multiple clients. This is outlined in the letter, within which HMRC states, “We have identified discrepancies in some of your clients’ returns that you submitted for 2021/222 compared to the information submitted by your clients’ employers or with the information held on HMRC’s systems around child benefit.” These errors relate to the high-income child benefit charge (HICBC), as well as discrepancies in P11D expense claims and P14 end-of-year employee reports submitted by employers.
The letter also states the agents have the option to arrange a call with HMRC to or wait for another letter within three weeks explaining further details, facilitating discussions regarding taxable benefits, PAYE details, and specific clients’ potential HICBC liabilities. The aim of these discussions will be to enable agents to support their clients as best as they can in correcting any errors and understanding any discrepancies without having to engage in a formal enquiry.
Why has this happened?
This initiative stems from a cross-referencing exercise aimed at identifying cases where taxpayers claim child benefit but do not pay the corresponding annual tax. HMRC is specifically targeting claims for child benefit made by high earners with incomes exceeding £50,000, uncovering mistakes in cases where the additional child benefit charge should have been applied.
HMRC has stressed that the letter is not a trigger for formal inquiries or compliance checks, with their goal being to collaborate with agents and their clients on a voluntary amendment program to rectify any errors in their returns.
The deadline to amend 2021/22 returns without facing a penalty is 31 January 2024.
If this is not done in time, HMRC have stated they will issue a discovery assessment which could result in a penalty charge. Charging interest on any liabilities not paid by this date is a statutory requirement.
HMRC has outlined the amendment process, asking agents to email them a spreadsheet setting the amendment out and/or any reason why an amendment is not required. However, HMRC are open to alternative means of communications which agents can agree with them.
You can read the HMRC letter here.
If you are a higher rate taxpayer and have any concerns about this, or if think you may have accidentally omitted the additional child benefit charge from your 2021-22 tax return, please don’t hesitate to get in touch. We’re here to help!
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