HMRC is facing calls to refund thousands of people it chased for extra tax payments as a result of its controversial high income child benefit charge. A tribunal ruled last week that the revenue could not pursue a man for £4,000 back taxes it claimed he owed because of his wife’s child benefit payments. It has led to calls for refunds to others who paid up in similar circumstances. The government introduced the high-income child benefit charge (HICBC) in 2013 to claw back some or all of the child benefit paid to couples where at least one partner earned more than £50,000 a year. The new charge led to thousands of people facing tax demands of up to 100% of payments made to their partner. Workers who knew nothing about the charge, or who after receiving a pay rise or a company car found they earned more than the threshold, were chased by HMRC. It is thought that 160,000 people have paid penalties for non-payment. HMRC has been backdating claims as far as 2013, with more than £2.5bn raised. Last week, one of those chased, Jason Wilkes, challenged HMRC’s right to claim the charge for previous years. It has pursued him for £4,000 based on the fact his wife had received child benefit between 2014 and 2017. Wilkes said he was unaware of the new charge ‒ which HMRC accepted ‒ but also argued its use of the “discovery” powers was unfair in his situation. A “discovery” is a power held by HMRC that allows it to reopen closed periods and issue bills for previous years where it wants to. The upper tribunal found that the tax department could not impose the charge based on discovery assessments where the person liable had not filed a self-assessment tax return for the year in question. It followed a decision in favour of Wilkes by the first-tier tribunal. The terrible design of the HICBC left many of the affected taxpayers – in particular those who paid tax by PAYE – simply unaware of it. HMRC has until the end of July to decide whether or not to appeal. If it does not, commentators expect HMRC to “do the right thing” and refund those in the same boat as Wilkes.

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