HMRC chases par­ents

The Sunday Telegraph - Money & Business - - Money - Adam Williams

Thou­sands of fam­i­lies are be­ing chased by the tax­man af­ter they failed to re­pay child ben­e­fit that they had re­ceived but were not en­ti­tled to keep.

Since Jan­uary 2013, par­ents who earn more than £50,000 a year have been re­quired to pay back some of the child ben­e­fit they re­ceive from the Govern­ment. Those with a salary of £60,000 or more must re­turn the whole pay­ment. Re­pay­ing the child ben­e­fit re­quires the par­ents af­fected to sub­mit a self-as­sess­ment tax re­turn. How­ever, thou­sands of par­ents have failed to do so and are now be­ing con­tacted by HMRC.

About 41,000 let­ters will be sent to tax­pay­ers who have failed to re­pay child ben­e­fit since the new rules were in­tro­duced. Some of the par­ents are likely to face fines for late pay­ment, in ad­di­tion to the amount to be re­paid.

A fur­ther 60,000 warn­ing let­ters will be sent to those who passed the £50,000 salary mark for the first time in the 2017-18 tax year. These tax­pay­ers are re­quired to sub­mit a tax re­turn and pay the money owed by Jan 31 2019.

As Tele­graph Money re­ported many times, HMRC is in­creas­ing its ef­forts to col­lect tax owed. Those who have as­sets over­seas have also come un­der the tax­man’s scru­tiny. Pa­trick Con­nolly of Chase de Vere, a fi­nan­cial ad­viser, said that, de­spite the child ben­e­fit rules be­ing more than five years old, many par­ents were still un­sure whether they owed money.

“While the ba­sic con­cept of the high-in­come child ben­e­fit charge is quite easy to un­der­stand, its im­ple­men­ta­tion is par­tic­u­larly con­fus­ing and leaves higher-earn­ing par­ents won­der­ing whether they should stop re­ceiv­ing child ben­e­fit or con­tinue to take it and then face a tax charge,” he said.

Mr Con­nolly said high earn­ers could elect not to re­ceive child ben­e­fit pay­ments in the first place, but this could af­fect their en­ti­tle­ment to the state pen­sion in later life.

He added: “There is an added layer of com­plex­ity for those who have to pay back HMRC, as many of these peo­ple don’t or­di­nar­ily com­plete self­assess­ment re­turns and may not know what they need to do and when they need to do it.”

An HMRC spokesman en­cour­aged those who had re­ceived a let­ter but were un­sure of their tax li­a­bil­i­ties to con­tact it di­rectly. Mr Con­nolly added: “With a sys­tem that is so con­fus­ing, it is no won­der that peo­ple make mis­takes.”

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