HICBC accusations
The taxman has been writing to innocent parents accusing them of not declaring the high income child benefit charge (HICBC) on their 2012/13 tax return. This charge claws back child benefit paid to the family since 7 January 2013.
The tone of the letter is aggressive. When read quickly it appears to instruct the taxpayer to amend their 2012/13 tax return immediately, in order to pay the tax charge. However, in the detail of the text the taxman admits the tax charge may not be due – in which case no action is necessary.
So how did he get it so wrong?
He has sent these letters to taxpayers who have reported income of over £50,000 for 2012/13, but he didn’t check the relevant facts about the family first, such as whether:
- child benefit was actually received in 2012/13;
- the highest earner in the family has already paid the HICBC; or
- the taxpayer’s adjusted net income is less than £50,000.
Adjusted net income is not the same amount as headline taxable income. Deductions must be made from taxable profits (or gross earnings) for trading losses, the gross value of gift aid donations and pension contributions.
If you have received one of these HICBC letters, please let us know, as the taxman won’t have sent us a copy.
