Mrs Gaimin Nonyane v HMRC (FTT - TC05577) 30 December 2016
Facts of the case:
The appellant earned income over £69,000 during the tax year 2013-14 when she had claimed and received child tax credit as well in the sum of £1055.60. She did not submit a tax return for the year in question as HMRC had not issued a notice asking her to file a tax return. However, HMRC did issue a letter, way later, on 17 September 2015 asking her to pay a charge of £1,055 being the entire sum of child tax credit received. As the appellant did not pay the sum demanded HMRC issued discovery assessment on 2 November 2015 for £1,055. The appellant appealed. HMRC rejected the appeal on the basis that the grounds of appeal were invalid. HMRC also rejected a request for internal review since the grounds of appeal themselves were invalid. The appellant then appealed against the assessment to the First-tier Tribunal (FTT).
The law
The High Income Child Benefit Charge (HICBC) arises under section 681B of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) and it applies where a person’s adjusted net income (defined under s.58 of the Income Tax Act 2007) for the year exceeds £50,000, and either or both of the following conditions are met:
- A person P is entitled to an amount in respect of child benefit for a week in the tax year, and s/he has no partner throughout that week who has adjusted net income exceeding that of P.
- P has a partner throughout the week who is entitled to child benefit for a week in the tax year, and the partner’s adjusted net income is less than that of P.
By application of S.681C where the adjusted net income exceeds £60,000 the entire amount of the benefit received is payable back to HMRC.
The dispute
Since the appellant didn’t file a tax return nor HMRC did ask for one, HMRC issued a discovery assessment under s.29 of the Taxes Management Act 1970 within the time limit provided under that Act. The appellant contended that HMRC should collect the HICBC from the date that they notified her of the change in law, which was in October 2015, on the grounds that;
- She was not aware of the change to the child benefit rules that came in effective 7 January 2013 because she had not received any notification from HMRC and had not seen or heard any of the public advertising from HMRC because she did not listen to the radio or watch television and had not visited places where billboard advertising had been placed;
- HMRC was under an obligation to notify all taxpayers who would or could be directly affected by a change in law and, instead, it chose to notify only those who had income in excess of £50,000 in the tax year 2011-12, which happened not to include her and therefore put her at an unfair disadvantage; and
- HMRC’s reliance on using advertising campaigns on the television, radio, social media and public billboards is an inappropriate way to inform people who might be affected by a change in law, particularly when compared with those who were sent letters.
The decision
The tribunal agreed with HMRC’s that they were not obliged to notify all taxpayers of changes in the law, and that ignorance of the law could not provide an advantage to one taxpayer over another. Quoting HMRC v Noor [2013] UKUT 071, decided by the Upper Tribunal, it concluded that the FTT did not have any general supervisory jurisdiction by way of judicial review so as to adjudicate upon challenges to HMRC’s decision making in relation to notification of a change in law to some taxpayers and not all. The appeal was dismissed.
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