HMRC penalties - this is terrifying!

[NarkyNarwhal]

My husband had a letter late November suggesting he needed to self-assess due to me receiving child benefit. This is the first we knew about it as our finances are kept separate and he has always been PAYE. This has led to some horrendous realisations about how much we owe, but he filed all the paperwork as soon as he was set up with a link (late December) and we have paid back all we owe plus the interest that was added. Not a small amount. We are now seeing penalties added to his account and some online calculations suggest we will be charged £1600 per year for late filing! Do HMRC always apply these penalties? When do they appear on our account and is the appeal process worth using? As background our son died suddenly in 2022 and our surviving son has had significant health challenges and a big op last year so our minds have not been on tax affairs. No letters were received prior to last Nov. Particularly panicking now as our beloved family dog may have cancer and we are looking at some very expensive treatment. Help!

So sorry for your loss. I can't help, I but thought I'd bump this for you

I would be phoning them getting everything sorted with someone and getting a letter to clarify everything that they have told you.

First of all - don't panic!

You can appeal against any late penalties citing "reasonable excuses"

https://www.gov.uk/tax-appeals/reasonable-excuses

the option you should use is "you were unaware of or misunderstood your legal obligation"

You can only appeal once penalties have been issued, but on appeal state:

"My husband and I keep our financial affairs separately and I was unaware that his salary had exceeded the child benefit threshold and consequently I was not aware that any of the child benefit needed to be repaid."

My SIL had a £100 late filing penalty last year and I gave her a paragraph to use that involved this type of reasoning and the penalty was cancelled.

I've actually found them very reasonable if you're reasonable with them. It sounds as if you have a good case anyway.
They were great with me after I was widowed and found my husband's affairs in chaos. Waived the late payment fines completely.
Don't panic.

I had a penalty for late filing. I didn’t owe any tax, paid the £100 fine but then couldn’t get on the gateway. I had flu and just couldn’t sort it before the deadline. DH tried and couldn’t either,
A few weeks later I had a demand for £+++ and the charge was building daily.
I immediately rang in a complete panic, explained my situation including the death of my mother and caring for elderly relative.
The advisor was so lovely, could see that I had erred but not trying to avoid paying tax and he wiped all the charges. Honestly it was a massive relief and totally unexpected.

You are all so reassuring, thank you so much! And I’m sorry so many of you have also been struggling x

I’m assuming your husband earns over the child benefit threshold.

think it’s 50k+ when you have to start doing HMRC self assessment and up to 60k they take a proportion of the child benefit back. Above 60k you’ll lose the finance aspect of child benefit but it’s usually still worth claiming if you’re not working as it means you’ll still count for NI contributions

Doing a self assessment when on paye is very easy.
just a case of getting set up (if not already) and each end of year tucking the appropriate boxes and adding in his salary which he should have from P60.

if you do that there won’t be any more late fees as long as it’s done before end of the following January.

if your husband has a personal pension he pays into you can add that to the self assessment and he’ll get the higher rate of tax discount associated with it instead of the 20% default Sane if he has any regular charity donations.

I'm sorry for your loss OP.

I'd agree with others that they should be reasonable in your circumstances. I'd call sooner than later though as January is their busy time - late January it's a long wait on the phone.

Not wanting to derail but if you aren't claiming already, DLA might able to be claimed for your sick child and help financially. It's not means tested.

Please call them - I forgot to file once, called and fessed up and they were lovely and so helpful. Sorry about your sons, that is so hard. Definitely extenuating circumstances.

Are you sure the £1600 isn't the charge for the next year they are adding?

Have you stopped claiming and specifically told them that?

Otherwise they may just assume you will continue claiming and they have made the adjustments to deduct over the next year.

Hi, no it’s the HMRC charge for late filing - it’s for every year my husband didn’t file a SA by the deadline. They haven’t added this (yet), it’s the figure I got from their online calculator for working out penalties and interest.

I had penalty fines for late filing my tax returns during Covid, I was not working or living in the uk at the time but should have notified them. They were very reasonable when I phoned to sort it out.
I had to pay the outstanding fines and then fill in a form to say why I’d not filed on time, they then repaid me the fines I’d paid.
Hopefully they will do similar for you.

Thank you so much. Happily, the op went well and (fingers crossed) our surviving son is now well - physically at least xx

Ring them, they will most likely waive the penalties. Did he not understand the law, it changed years ago

Sorry for your loss. I would call them and see what you can do.
this happened to us and we had to pay back and they were not nice to my husband sadly.

The HICBC is always on the higher earner, regardless of who claims the benefit so I wouldn’t use that sentence.

I also don’t think you can use this claim “you were unaware of or misunderstood your legal obligation" for appealing penalties relating to HICBC as there has been so much press about it in recent years, but it is worth a try. It has to be by post and done within 30 days of the notification, so make sure to do asap - https://www.gov.uk/guidance/check-when-to-appeal-a-self-assessment-penalty-for-late-filing-or-late-payment

I am a tax adviser so happy to help where I can OP 🤞🏼

I got landed with huge penalties (thousands!) for backdated S.A.s that I hadn't been notified I needed to file. It was really scary. I appealled by letter (may be an age thing) - and did get them overturned - including overturning several £100 ones that I had already paid (on the grounds that it was easier to pay than try to engage with them, but they turned out just to be the 'starter' penalties!)

HMRC aren't easy to deal with these days, but state your case and I'd hope you can get them overturned.

Definitely call! I've always found the advisors helpful and understanding.

Oh no! Sorry to hear that.

My HMRC penalty was suspended for a year and I paid nothing. Different circumstances though, i.e. the total cock-up of filing my tax return with the previous year's P60, which neither I nor the accountant noticed. I called HMRC to 'fess up and told them exactly what had happened, and they could not have been more helpful (although getting through on the phone is a bit of an ordeal).

Thank you!

Thank you.

I started claiming CB in early 2000s long before this rule and when he was earning much less. Our finances are separate and as he’s PAYE it never occurred to him he should be doing a SA when his salary went over the threshold (and I didn’t realised either). We clearly missed the message but haven’t had any letters from HMRC until last November (which we acted on immediately).

Does anyone know at what income child benefit disappears completely?

How long has he been over the threshold? I'd be surprised if its as many years as you think it is (esp if he pays into a pension as that is exempt from tax) - I got a letter from HMRC when I went over the threshold, but it had only happened that year following a pay rise that just nudged me over. I don't think they'd leave it for years and years and then write to you...

It's now £60,000.