New HMRC powers of discovery will be retrospective

The unpopular high-income child benefit charge (HICBC) was introduced in 2013. Despite HMRC administering child benefit payments, it is still finding taxpayers that have not declared the benefit in previous years. Once the Finance Bill is enacted, HMRC will be able to open discovery assessments to collect any unpaid tax charges from as far back as 2013. However, the change will not apply to those who have already appealed against such assessments.

This addition to the Finance Bill is a result of the Upper Tribunal decision in Wilkes v HMRC, which found that HMRC did not have the power to impose the HICBC by means of discovery assessment as there was no income which ought to have been assessed. As a result, Mr Wilkes did not have to pay the tax charges. Individuals with income over £50,000, where either they or their partner receives child benefit, could soon receive a large unexpected tax bill from several years ago.