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!

I thought it was a graduated thing, with diminishing amounts of benefit depending on salary.

I'm so very sorry for the loss of your son. I would urge you to write to your local MP. They have a back channel to HMRC, which might be helpful as this is the busiest time of year. I do struggle to imagine that they won't be lenient in your circumstances but you can't be sure and this should help.

All the best for your son's recovery xx

It’s a number of years and no letters - we’ve clearly missed some media “stuff” around this but we’d have been straight onto a brown envelope.

Quite understand the need to pay it all back (and have done) but feel penalties are rather unfair as we would have immediately stopped claiming and put in SAs the minute we were asked to.

Yes. For the current tax year you start paying it back in tax from 60k income and the extra tax gradually increases until it completely offsets the CB at 80K

I took over my mother's financial affairs (with LPA) about ten years ago as she has dementia. I discovered she had not filed her tax returns and had hidden a couple of penalty letters (her dementia meant she had started to 'hide' anything that looked official and worrying). When we contacted HMRC and explained the situation they cancelled the penalties.

I think it's difficult for HMRC when, like in OP's case, one person earns the higher salary and the other claims the child benefit.

Do you have to provide HMRC with the details of both parents when making a claim for the child benefit?

If HMRC had all the information they needed to have informed you of the need for a tax return and they've only told you now, despite them having the ability to know themselves, I'd also be arguing that they should have told you sooner.

That's the thing about separate taxation, and the general lack of a joined up identity system in this country.

They wouldn't have sent him a letter about child benefit because they don't have any way to know his family are receiving it. And they have no way to know that you, as a CB recipient, are married to a person with a higher income.

I agree that they could have sent all recipients a letter saying "Are you living with a higher earner?" Or sent all higher earners a letter with their tax code saying "does your household collect CB?" But it was pretty well advertised.

This happened to me as my salary increased but I didn’t realise I needed to fill one in. I completed the tax return then immediately sent an email appealing the charges and they took most of them off.

You get state pension credits while you’re claiming child benefit, as I understand it. So if you’re not currently paying national insurance through employment/self-employment it might be worth still claiming child benefit in order to get it. Realise you probably are, but just in case.

No you need to know the law and file, onus is on the person not hmrc. That’s a bit like saying I’m self employed and I’m not going to bother paying tax unless I am personally written to.

i filed late once op and grovelled and they waived the penalty. What I was told was to fall on my sword ie really sorry my cock up and not try and shift blame. In your awful circumstances I’d be saying really sorry we took our eye off the ball, well your husband needs to.

Except that when you apply for child benefit you are asked to give the NI number of both parents, so they CAN join it up (and presumably is how they now know to tell him he should have been self-assessing)

As above. Even if you stop receiving CB make sure you are still registered (and tick the no payment box) as you get NI credits up until your child is 12.

Oops sorry, yes that is the base threshold. Sorry, that will teach me to jump in without carefully checking the HMRC website first!

This has been something that's been catching out people for quite a few years (e.g. https://www.theguardian.com/money/2019/feb/09/mother-hit-with-4500-tax-charge-for-child-benefit) and it's been covered in the media a lot.

It's worth speaking to HMRC and appealing the penalty element. Although I probably wouldn't mention the dog. There is history of HMRC waiving the penalty where it's a result of a genuine error or oversight.

@NarkyNarwhal

I am sorry to hear of your troubles. HMRC will listen as others say but sadly - to add to your distress - you cannot simply say "oh this happened" but you will need to provide them with copy documents. That would include paperwork re DS hospital admissions/operations.

Thank you - dog won’t come into it! That’s just my additional reason for stress!

Goodness, that sounds horribly stressful, I’m so sorry.

But if you're self employed you KNOW you need to pay tax on your earnings.

It's quite feasible that a husband might not even realise that his wife is claiming child benefit and that wife might not realise her husband earns over the limit.

If my DH and I had children, he wouldn't have a clue about child benefit, so if I'd claimed it he wouldn't know. I actually do his tax return in our situation, so it wouldn't be true to life, but if someone is married to a man like my DH, it's entirely plausible that you wouldn't realise you had a liability to repay it until the tax man told you.

Certainly in the beginning of Child Benefit, it wasn't so widely advertised in the media. It's only where people have been later been caught for big repayments it's become apparent that people clearly weren't educated by HMRC enough to know their obligations.

As a PP has said, you (at least now) have to input both partner's NI numbers into the claim so they can cross check it, and I'd hope that there are big fat warnings on the screen when you apply.

Can I ask OP how many years did they make you pay back? And was there a penalty on each year? How much?
We are in exactly what same position as you, waiting to hear from hmrc atm - but response times are very slow- apparently they're only processing July letters right now, so won't get to our November owning up letter for a good while apparently.

So sorry you’re in this position too. It’s awful isn’t it? They asked my husband to self-assess four years back. He told them he thinks be needs to go back further but they said they can only ask for four years atm. So far we’ve had interest charged for three years we were late (approx £500) and now a £240 charge for late payment from the first year of SA (it seems to come in drubs and drabs). No doubt they will come for more but at least we have evidence that we tried to do the right thing! Suggest you screen shot and diarise all interactions so you can show you’ve done all you can to rectify matters. We phoned in November and got a link to online SA a few weeks later so I’m surprised they still haven’t asked you to at least fill in forms.

Thank you
They told us they'll most probably ask us to go back 4 years too, but can't confirm until they've processed our letter. Yep we owned up / came clean my husband is really proactive and on it with them but we're just waiting...
Thank you for your info
How likely do you think it is they'll either stay at 4 years or go back further? Did they give any hints?
I mean you just want to know when it'll end right? Atm all my wages are going in a pot to pay them back ready for the massive bill. Hardly living right now. But hey we (my husband and I) shouldn't have spent it in the first place, so.. Just doing what's right I guess. It's the not knowing that's getting me right now though..

How much were you fined in the end we are in a similar position x

So sorry to hear that you’re in a similar position :-(

Luckily we appealed an initial small fine and were successful (although they may come back for more, who knows). We did pay all owed amounts plus interest straight away though and that helped, I’m sure.
They were actually very reasonable and sympathetic so I would recommend an honest appeal application. Very best of luck xx