In James Robertson v HMRC 2017 [TC6410], HMRC was unable assess penalties for failure to notify a High-Income Child Benefit Charge: the legislation does not contain the correct mechanisms to allow HMRC to make an out of time assessment (discovery) for something that is not 'income'.

  • The High-Income Child Benefit Charge (HICBC) is a tax charge which claws back up to 100% of any child benefit received by a higher earner or their partner.
  • HMRC may make a Discovery Assessment if they find an incomplete or inaccurate disclosure leading to a loss of tax: this may be income which ought to have been assessed to income tax, or chargeable gains or an excess relief being given.

Mr Robertson and his wife were teachers and employed under PAYE and they were not under Self Assessment.

  • With income in excess of £50,000, Mr Roberston had a duty to notify HMRC that he was liable to High-Income Child Benefit Charge (HICBC).
  • He failed to notify as he was unaware of the legislation.
  • HMRC atttempted to raise a discovery assessment and penalties, the taxpayer appealed.

The first tier tax tribunal found that no penalties could be applied, as there was no potential lost revenue to assess. There was no self-assessment because no notice to file was given by HMRC, HMRC could not make a discovery assessment as the HICBC is not income, a requirement of s 29(1) TMA.

Finance Act 2022 Update

Note that Finance Act 2022 has changed the discovery provisions retrospectively such that they can be used to collect underpaid taxes on omitted High-Income Child Benefit Charges.

Useful guides

High-Income Child Benefit Charge (HICBC) 
Summarising the rules and comparing topical cases.

Penalties: failure to notify
As it says on the lable

How to appeal a decision of HMRC
Key steps in appealing a decision of HMRC.

How to appeal a tax penalty
Essential reading in cases were there are penalties too

Discovery assessment and time limits
How far HMRC can go back, what conditions must be met for a valid discovery

Penalties: Error in a return or document
How work out penalties for different forms of inaccuracies


James Robertson v HMRC 2017 [TC6410]