HMRC accused of sending incorrect child benefit red letters

5th September 2014

HM Revenue and Customs (HMRC) has been accused of distributing erroneous letters to parents on high incomes that are continuing to receive child benefit payments.
 
The tax authority has been criticised by UHY Hacker Young for sending out “incorrect” letters to higher-rate taxpayers it suspects have not repaid their child benefit payments.
 
HMRC has written to 30,000 high-income parents, claiming they have failed to account for the child benefit charges when they completed last year’s self-assessment tax return.
 
A two-child family is entitled to child benefit payments worth £1,770-a-year, but part of this must be repaid when either parent earns over £50,000. Those with an income of more than £60,000 must repay everything. If both parents earn over £50,000 the higher earner pays the charge.
 
However, Mike Crellin, tax director at UHY Hacker Young, said he has dealt with calls from a “significant number” of clients who say their partner had already paid their bill, only to be told they may still owe money.
 
An HMRC spokesman said those who have paid the charge should simply disregard the letter.
 
“These letters are simply designed to help taxpayers get their returns right by reminding customers who file under self-assessment of the importance of including the high income child benefit charge on their tax return,” he said.
 
HMRC has already received criticism for its use of blanket mailshots, while proposals to hand the tax authority the power to raid personal bank accounts to retrieve unpaid tax has also resulted in fierce debate with detractors citing recent administrative errors as a basis for their scepticism.
 
Jonathan Isaby, chief executive of the Taxpayers’ Alliance, said: “Our tax and benefit system has become so complex that even HMRC can’t make head nor tail of it.

“The taxman got 5.5 million bills wrong last year. Until both our tax and benefit systems are radically simplified, mistakes will continue to be made and ordinary people will feel the pain.”

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