Tuesday 13 August 2013

Child Benefit Changes Add To HMRC's Burden

In May I wrote about the oncoming clusterfuck aka Osborne's child benefit changes, one issue noted was that the changes could create 500,000 more self-assessed taxpayers, because taxpayers will have to assess their own liability for the new charge – which would be very expensive for HMRC to administer.

Parents on higher incomes who continued to receive Child Benefit after January 2013 have been reminded that they must register for Self Assessment by 5 October 2013 to avoid any penalties in relation to the High Income Child Benefit Charge.

Taxationweb reports that HMRC will be writing to around two million higher rate taxpayers, including those affected by recent changes to Child Benefit. The letter reminds them that if their income is over £50,000 and they or their partner received Child Benefit in 2012/13, they will need to complete a Self Assessment tax return for the 2012/13 tax year. They must register now with HMRC for Self Assessment if they have not already done so. 

Lin Homer, said:

HMRC is committed to helping people pay the right amount of tax. If you have had certain changes to your income in the last year, including those affected by the changes to Child Benefit, you have until 5 October to register for Self Assessment.”

The increase in the number of people registering for self assessment, as a result of the child benefit changes, will significantly add to HMRC's workload.

Tax does have to be taxing.

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  1. They already know who gets child benefit (if they don't then who on earth is paying it out every 4 weeks?) and (at least for employees) who earns above £50K. Given that they have not written already, then this is just a way of raising revenue through fines. Or perhaps George thinks that filling in forms is also "just a lifestyle choice"!

  2. HMRC are of course free to send a tax return to anyone at anytime which must be completed and returned to the taxpayer, but otherwise taxpayers can only be forced to self-assess under the statutory requirements laid down by the Taxes Management Acts.

    So either taxpayers fit into one of those categories or they don't.

  3. Do you think it would help if I sent them a copy of the FAM and FAD tables used to allow and restrict the pre Child Benefit (Family Allowance) PAYE coding allowance. FAM included an allowance in accordance with the child's age and position in the family and the FAD made a restriction to ensure no over allowance. All calculations made manually, shock horror!

  4. I fail to understand why HMRC can't administer this in RTI - they have all the information required within their myriad systems and the Connect system working on at least 26 databases, they pay the money every 4 weeks, notify PAYE coding and hold all relevant child details.
    WTF are they getting paid to do FFS?!

  5. Another example of outsourcing to hapless punters, making them responsible for something that they know little or nothing about, have no training for, and for which they will be found wanting if they get it wrong and, in the nature of the circumstances, will be on the wrong end of a statutory fine.

    Again, bloody outrageous. Can't we stop this nonsense?

  6. I'm glad you pointed the finger at Osbourne on this one Ken,
    As I understand it not even the senior bods at HMRC were happy with this!

    God knows why they didn't just incorporate Child Benefit into the Tax Credits system some how?

  7. What, do you mean like an overarching all encompassing and variable, err, universal credit?

    1. universal credit will not include all benefits or child benefit, hardly overarching all encompassing!!

  8. I would like to know how many complaince resources will go into this. I suspect that couples where only one works and earns between 50-60k will ignore this. Will/Can they be tracked down?

  9. HMRC need a radical over haul - I have just spent 31.42 minutes on the phone (29 of those on hold) to ask why I have received a letter about Child Benefit, my only child is 31. Apparently it was a mistake, I pointed out that as a tax payer I objected to my money being wasted in this way. I was told the call was being recorded - I said this was excellent news because if this came back to haunt me in the form of HMRC chasing me for money I could not possibly owe them I would be asking for copies of the recording.