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HMRC child benefit demands “disproportionate”, says Tory MP (5 September 2014)

Date: 05/09/2014
Duncan Lewis, Child Care Solicitors, HMRC child benefit demands “disproportionate”, says Tory MP

Families in which one partner has a salary of more than £50,000 are being sent letters by HMRC, demanding immediate repayment of child benefit they received before the government stripped parents who earn more than £50,000 of some of their child benefit entitlement.

The Telegraph reports that the letter warns parents, “You Must Act Now!”, even though some recipients of the letters claim they have already repaid any money owed.

An accountant told The Telegraph some of the letters had been sent in error, as the overpayment had already been repaid by the recipient’s partner.

It is believed HMRC has sent out 30,000 letters to working parents. The 30,000 parents who have received letters are the remainder of around one million families affected by the changes to child benefit.

Couples in which one partner earns £60,000 or more lost all of their child benefit entitlement under the government’s child benefit reforms. Couples in which one partner earns £50,000 or more saw a reduction in the amount of child benefit they were entitled to.

The child benefit repayments being demanded refer to a three-month period after the benefit entitlement was axed for parents who earn £50,000 last year.

Parents with just one child would have to repay £263 and families with two children would owe HMRC £438.

However, MPs have criticised the letters being sent out as “disproportionate”.

Senior Conservative MP Christopher Chope said:

“This is a disproportionate way to deal with the issue – the nightmare of this new tax on families who want to do the right thing is far from over.

“We knew it was going to be an administrative nightmare – and so it has proved.”

Tax expert Mike Crellin told The Telegraph that many of his clients who have already repaid the child benefit owed had been contacting his company, having received a letter from HMRC demanding immediate action.

“We have had lots of queries about these letters from concerned taxpayers – who thought they had their affairs in order, but are now worried that they have made an expensive mistake.

“In most cases, they have in fact completed the return and paid their tax perfectly correctly.”

Parents on high incomes were asked to opt out of receiving the benefit – while others were asked to complete self-assessment forms to enable HMRC to calculate how much benefit needed to be repaid. The repayment is now due, said a spokesman for HMRC.

“Those who have paid the tax charge due need not be concerned and can simply disregard the letter,” HMRC said.

“The letter reminds taxpayers to include the charge on future tax returns – and we would encourage couples to discuss between themselves which partner might be eligible for the charge.

“If that is not possible, we can provide guidance to allay any concerns about who is to pay the charge.”

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