Child benefit - fine for previous years earning under £50k

[Puppy78]

DH for 2017 - 2018 went over the £60k threshold so we paid our child benefit back. We've now been fined £2.5k for not doing the previous 2 years assessments when he was earning below £50k. I've looked at the paperwork we received and there weren't any clear instruction on us having to do this, it just said 'Self Assessment incomplete' for those years. We've paid the £2.5k fine

I'm not really looking for advice, this is more of a 'public service announcement' as the fact you have to do previous years doesn't appear as advice on places like Money Advice Service.

So, they are expecting you to predict 2 years in advance and start self assessments on the possibility of breaching 50K earnings?

Yeah it's sliding scale reductions from £45-50k, then nothing after £50k.

You will owe them the benefits back.

Could you not have appealed it? Did you owe any CB in the years you were fined for? Did you speak to them before paying the fine?

Yeah it's sliding scale reductions from £45-50k, then nothing after £50

This is incorrect. You pay back a proportion between £50 and £60k and over £60k it is all paid back

@dementedpixie - we didn't owe any CB for those years, and over the past year DH has spoken to HMRC 5 or 6 times and it's never been mentioned. It sounds like the person DH spoke to said we would have to appeal anyway and interest would accrue if we didn't pay.

Any advice on appealing? As far as I can see from the correspondence we have 1 letter (simply saying incomplete. There was no tax owed for those years) where it is mentioned and one online portal message.

Well if there was no tax to pay then there is no fine, surely?

I've never done a self assessment until I was over the £50k threshold as there's no need, in fact only registered for self assessment once I hit the threshold.

If HMRC were expecting a self assessment for those 2 years your DH must have been registered for self assessment so did he not receive any letters telling him his return was due?

Well if there was no tax to pay then there is no fine, surely?

It doesn't work like that, the OPs DH has been fined for not filing a SA return when HMRC were expecting one, he hasn't been fined for not paying tax.

I don't think this is right op. I am in the midst of all this and they are being very helpful. Why did your husband need to do self assessment if his earnings were below £50k?

But why would they expect one I'd he was under the threshold for paying anything back? Did he register for self assessment prior to his earnings going over £60k?

He only registered once he was over the £50k threshold (2017 - 2018).

He's been told that they check the previous 2 years once you go over. Although that has only been made clear to us today, once we received the fine of £2.5k.

Has now completed this year's self assessment and apparently owes another £1.9k in tax due to student loan repayments. As he is a salaried employee shouldn't this all be done by PAYE? Self assessment is turning into a nightmare! The only reason we are on self assessment is because his salary went up significantly and unexpectedly towards the end of last year and we were claiming child benefit at the time.

Is it time for us to use an accountant? The first fine was fine, but another £1.9k is a lot all in one month!

Have the student loans been paid from his salary? You can claim child benefit but opt out of payment to keep the NI credits

I am an accountant, but in industry. I re commend you get an accountant now. They will explore possibility of appealing etc. Bear in mind most hmrc staff on the phones do not have much training etc.

@Puppy78 I would definitely get an accountant to check over the figures and the fine. I am an accountant and appealed a similar fine for someone last year and got it all back.

With regard to the student loans has he entered the amount already deducted by his employer? That is a common thing people forget to do.

It may not be possible to appeal the penalty as we don’t have all the information and figures here but it would definitely be worth a few hundred pounds this time to get it al checked over. Once it is sorted I think it should be simple enough for you to do yourself going forward.

Yes with regard to HMRC staff training on the helpline, the ones the public get are not the more experienced ones. Us accountants get the experienced ones on our dedicated line but you might want to note that HMRC call the experienced staff those with more than one year’s experience. Compared to lots of us accountants with 20+ years it can be quite frustrating!!

That said they will usually be very helpful.

Threeprinces - that is illuminating advice re the training of staff! I'm looking for local accountants now to help us look at the appeal together. HMRC said when he paid that he could appeal it, and said he would have to go through the appeals process regardless of whether we paid initially.

DH is just off the phone with HMRC and doesn't in fact have to pay the additional £1.9k, so that is something!

Great news re the £1.9k!

I suspect the fine may be for failing to file a tax return when he was asked to but didn’t really realise he had to?
If so, there may well not be an official ‘reasonable excuse’ but I have got people off it before by explaining their naivety and the fact there was no tax lost. I thought it was worth a go and was pleasantly surprised that it worked! It would be a bit pit luck though.

Good luck.

@Threeprinces - you're right. After talking to DH last night when be got home the fine is for failing to do the tax return when asked to, although he didn't really realise he had to. He did them last night and we actually got a small amount of tax back.

Any advice on an appeal? You're right that he was naive, largely because he pays tax by PAYE. To be fair to DH he has spoken to HMRC about 6 times this year and it hasn't been mentioned to him.

Definitely get someone to help you appeal. I deal with this all the time with HMRC

Why on earth did you just pay the fine?

They shouldn't be able to impose a fine of that amount without him ignoring multiple letters over months if not years and you say the only year he earned over£50k was 2017/8.

He didn't before that and the tax return for 2018/9 isn't even overdue until the end of this month. Are you sure the £2.5k isn't underpaid tax or student loan payments?

Although he should be talking to his employer if they are messing up PAYE to that amount.

DH paid the fine after being told he would incur further charges as they would refer it to a debt collection agency.

It is definitely a fine. Apparently there is a £10 a day fine applied over 90 days for each day you dont do it (this doubled as it was for 2 tax years). At some point there was also an additional £300 charge per year. DH paid the initial fine (£200), wasn't told there were going to be additional fines and was told to do it 'as soon as possible'. Obviously knowing he owed no tax he didn't do the 'as soon as possible' which is how we've ended up in this situation.

Just to be clear - DH logged onto HMRC during this period and it wasn't clear huge fines were adding up. The charge wasn't there in December when he logged on to pay back the child benefit we owed.

I'm annoyed that if 'Self Assessment' is really meant to be something you can do yourself the processes and fines need to be a hell of a lot clearer. It isn't even mentioned on their own website that the charges can get this high:
www.gov.uk/self-assessment-tax-returns/penalties

Thanks everyone for advice.

You definitely need to find an accountant.

Something isn't adding up - if HMRC are saying he didn't file a return when asked to then how could he not have known?

Did they ask him to retrospectively complete returns for the preceding 2 years once he registered and that's what he hadn't done? Surely he had reminders?