A former soldier persuaded the First Tier Tribunal (FTT) to restrict the scope of HMRC's assessment for a High-Income Child Benefit Charge (HICBC). He claimed that he was unaware of the charge due to being absent from the country on military operations. HMRC's discovery was permitted due to a retrospective change in the tax law and the taxpayer missed the cut-off by a matter of days.

The FTT accepted that Mr Baron’s absence from the country on military operations:

  • The fact that the children in question were not his and he had no financial involvement in their upbringing.
  • The fact that he did not know that his partner had ever claimed child benefit.
  • The fact that the original claim for child benefit made by his partner was made a time before any warnings were included regarding the earnings limits and these were all grounds for claiming ignorance of the law.

He had therefore taken 'reasonable care' in the two tax years 2015/16 and 2016/17 to avoid the insufficiency of tax and HMRC were not entitled to rely on the extended time limits for the assessments for those two years.

However, the taxpayer's failure to notify could not be attributed to a failure by HMRC to inform the Appellant that the liability was due. Only the Appellant held information about many of the variables that determine liability to the HICBC including non-PAYE sources of income and tax reliefs deductible in calculating Adjusted Net Income (ANI), the identity of a person’s partner (if applicable) and which partner has the higher ANI.

The taxpayer was successful in appealing two years of Discovery assessment but tax penalties for the five years 2015/16 to 2019/20 remained intact.

Editorial note

The taxpayer was very unlucky on the timings of his appeal. A 2022 law change, made with retrospective effect, facilitated Discovery Assessment in HICBC cases but only where an assessment has been issued and was subject to an appeal notice given to HMRC (in writing) on or before 30 June 2021. In this case, the taxpayer's appeal was made on 18 July 2021. 

Useful guides on this topic

High-Income Child Benefit Tax Charge
What is the High-Income Child Benefit Charge? Who pays it? Can you appeal against an assessment? Are there any useful cases from the tax tribunals? 

Adjusted Net Income Calculator
What is Adjusted Net Income? How do I calculate it? Why is it important? 

Discovery assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences? Case law tracker.

S.8(1) notice to file a tax return
This guide examines the implications of a notice sent to an individual under s.8(1) TMA 1970 to file a tax return.

Penalties: Failure to Notify
What tax penalties apply if you fail to notify HMRC that you are chargeable to tax? Can they be appealed or reduced?

How to appeal an HMRC decision
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal, what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

Mr Paul Barron v HMTC [2023] TC9053