Discovery assessments look set to be applied to the High-Income Benefit Charge under new legislation set out by the Government.
A loophole regarding discovery assessments and the charge was brought to light following the case of HMRC V Mr Wilkes last year.
The case saw the Upper Tribunal agree that the assessment for the High-Income Child Benefit Charge (HICBC) was not validly raised, following the HMRC appealing an earlier decision in Mr Wilkes’ favour.
HMRC are now appealing the decision to the Court of Appeal, but the case has had an impact on tax legislation in a bid to close the loophole.
Ahead of the appeal, part of the Finance Act 2022 includes plans to change the discovery provisions retrospectively so they can now be applied to collect any underpayment of the High-Income Benefit Charge.
HMRC says the move will provide certainty that HMRC may recover HICBC through the issue of a discovery assessment.
So, are you aware of discovery assessments and the High-Income Benefit Charge? Make sure you brush up as the measure is introduced.
What is a discovery assessment?
A discovery is a power held by HMRC to reopen closed periods if they believe there has been an underpayment of tax. They will then issue an assessment for the tax they think has been underpaid.
What it means for the High-Income Benefit Charge
The High-Income Benefit Charge is a tax charge for any individual who earns over £50,000 and either they or their partner receive Child Benefit or someone else gets Child Benefit for a child living with the individual.
The new rules clarify that those who are liable to pay the charge must notify HMRC, or risk HMRC recovering HICBC through the issue of a discovery assessment.
It is stressed on the government’s website that the measure “does not introduce any new or additional obligations or liabilities; it simply maintains the widely accepted and understood position that existed until recent litigation called this into question.”
Are you worried about a discovery assessment? For expert advice on related matters, do not hesitate to get in touch today.
“Richard Anthony case study – Terry Lewis – Jaques Samuel Pianos Widely considered to be London’s leading piano retailer, Jaques Samuel Pianos has grown considerably from its humble beginnings in the front room of Mr Samuel’s home in Notting Hill. They are now internationally recognised and have provided pianos for high-profile clients like Queen and […]”
Terry Lewis – Jaques Samuel Pianos
“Richard Anthony: ‘a super-star firm’ MT Finance is a property finance lender, specialising in bridging loans and auction finance. They assist numerous property professionals, business owners, and individuals with their finance requirements and specialise in short-term asset-based lending. Founder and Director, Tomer Aboody, knew that as an asset-based lender, the business would require an expert […]”
Tomer Aboody – MT Finance
“A family fairground success story The Botton family have been running a traditional fairground, arcade and amusement park in the heart of Skegness since taking over the Pleasure Beach in 1965. Jim, the Director of the company, took over from his father and now heads day-to-day activities and administration. He said: “The Pleasure Beach is […]”
Jim Botton – Pleasure Beach (Skegness)