Employment lawyer wins £250 tax penalty case

Employment lawyer wins £250 tax penalty case

Mar 20, 2024

A lawyer earning over the £50,000 threshold has been allowed off a £250 high income child benefit charge (HICBC) penalty due to ‘ignorance of the law’

HMRC attempted to contact Rabina Kajla regarding a £2,181 high income child benefit charge for the tax years 2018/19 to 2019/20.

Additionally, a penalty charge was applied for the two years, amounting to £257.40 under section 7 of the Taxes Management Act 1970.

Kajla represented herself at the First Tier Tribunal in a case where she was disputing the initial HCIBC charge and subsequent penalties Her child benefit claims were for three children, and up until 2019/20, she was an employee paid via PAYE so had never had to complete a self assessment return.

HMRC contacted Kajla with a nudge letter on 2 December 2019 regarding the charges, but the appellant claimed she had never received this.

Over a year later, officer Mahmood began a compliance check on the appellant, concluding that she was liable to a charge for 2018-20. The opening letter was sent on 23 February to the same address as the first nudge letter.

Kajla quickly responded to this letter, replying on 26 February 2021 informing them of her lack of awareness of HICBC. She stopped claiming child benefits after this contact.

Official assessments were sent out on 8 April 2021, followed by the penalty assessment one day later.

Kajla appealed to HMRC regarding the penalty charge, but the appeal for the HICBC was made directly to the tribunal, and therefore in the eyes of HMRC was invalid. Evidence of this was recorded in a phone call, in which Kajla had a reference number in a letter.

Although HMRC claimed to have told the appellant about having to appeal to HMRC and not the tribunal, Kajla only appealed directly to the tribunal and received no reply to her appeal letter. She sent two letters in April 2021, which HMRC had no record of.

A letter sent to HMRC on 26 October 2022 was received however, appealing both the penalty charge and the HICBC, taking this to the tribunal on 5 December 2022.

The deadline to appeal to HMRC was 30 June 2021.

Tribunal judge Nigel Popplewell made clear he did not doubt the appellant had made the claims but understood that the initial claims to the tribunal were invalid as there was no physical evidence.

He also took into account the wording of the letter appealing the penalty charge to see if there was any implication to appeal the HICBC, although this was not found.

Popplewell said: ‘We agree with HMRC that the appellant’s appeal against the assessments was notified to HMRC in her letter of 25 January 2022.’

Regarding the appeal of the penalty assessment, the tribunal had to decide whether Kajla was telling the truth that she did not receive the initial nudge letter.

Popplewell said: ‘In our view the appellant was a truthful and reliable witness. We accept her oral evidence that she did not receive the nudge letter.

‘She is clearly a bright individual who shoulders considerable responsibility in her job and appreciates the importance of analysing and responding to correspondence.

‘It is our view that had she received the nudge letter, she would have responded to it. The fact that she did not supports her assertion that she did not receive it.

‘We find therefore that the appellant had a reasonable excuse for not notifying HMRC of her liability to the HICBC until she received the opening letter based on ignorance of the law, and thus is not liable to the penalty.’

Kajla lost the appeal against the HICBC of £2,181 but had the penalty waived.