Joanne Robson v The Commissioners for HMRC

The form of the hearing was V (video) using the HMCTS video hearing service. The hearing was attended by the Appellant, the witness, and the representatives. Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.

This is an appeal against the following assessments:

In addition, interest is chargeable.

The discovery assessments are made under s29 Taxes Management Act 1970 ("TMA") in respect of the Ms Robson’s liability to the High Income Child Benefit Charge ("HICBC").

Originally Ms Robson had also been assessed to HICBC for tax years ended 5 April 2014, 2015, 2016, and 2017. In addition, penalties for failure to notify had also been assessed.

The assessments to HICBC and penalties were dated 13 May 2021. Ms Robson requested a review, and the review conclusion letter dated 22 September 2022 upheld the liability to HICBC for the tax years ended 5 April 2018 and 2020, but the assessments for the earlier years, and all of the penalties were cancelled.

Ms Robson now appeals against her liability to HICBC for the tax years ended 5 April 2018 and 2020.

Witness statements were submitted from Elizabeth Butler, a tax professional caseworker in HMRC's HICBC Team, and Jacqueline White a Senior HMRC Officer working in the Campaigns & Projects Team. Ms Butler was unable to attend the hearing for reasons given to the Tribunal. Ms Butler’s evidence was addressed to whether HMRC had made a “discovery” for s29 TMA purposes. As Ms Robson did not challenge Ms Butler’s evidence, the hearing proceeded in her absence. The statements of the witnesses were taken as read as evidence in chief. For the reasons that will become apparent below, Ms White was not cross examined. The electronic documents to which we were referred were documents bundle of 156 pages, and HMRC's generic bundle relating to High Income Child Benefit Charge appeals of 808 pages.

The background facts are largely undisputed, and we find that they are as follows:

Ms Robson is an employee whose salary is subject to withholding of tax under PAYE. Ms Robson was never asked by HMRC to file self-assessment tax returns for the periods under appeal.

Ms Robson’s first child was born in 2007, and Ms Robson claimed child benefit shortly thereafter. This was before the introduction of HICBC, and the Child Benefit claim form in use at that time would therefore have made no reference to HICBC.

Ms Robson first came within the scope of HICBC in the tax year 2013/14, when her income exceeded £50,000 for the first time. She was not sent HMRC’s SA252 letter which would have advised her of the introduction of HICBC.

No claims for Child Benefit were made by Ms Robson after the introduction of HICBC in 2012/13.

“Educational” letters were sent by HMRC to Ms Robson at the address on HMRC’s file on 7 October 2019 and 5 November 2019. However, these were not received by Ms Robson as she had moved away from that address in August 2016. Although she had notified HMRC of her move, HMRC had not updated their records to reflect this change.

Ms White's witness statement described the extensive Government campaign in 2012 and 2013 to raise awareness of HICBC and its consequences using advertisements, television adverts and letters/mail shots to customers who would be affected. Of course, at that time, Ms Robson was not a higher-rate taxpayer, and we consider that it is unlikely that she paid any attention to the campaign. Ms White also described the ‘briefing’ that was issued by HMRC in November 2012 to over a million higher rate taxpayers. As her evidence was entirely generic and focused mainly on attempts by HMRC to publicise HICBC to higher rate taxpayers in 2012 and 2013 and as Ms Robson was not a higher rate taxpayer at that time, we did not find Mrs White's evidence about these campaigns of any material assistance in this case.

On 10 April 2021, HMRC's computer system allocated Ms Robson's case to a caseworker in HMRC’s HICBC Appeals and Complaints team. The caseworker reviewed HMRC's records. These showed that Ms Robson had apparently been sent the "educational" letters mentioned above. The records indicated that Ms Robson had claimed Child Benefit and that Ms Robson's adjusted net income for 2013/14 to 2017/18 inclusive and for 2019/20 exceeded £50,000.

HMRC wrote to Ms Robson on 10 May 2021 in respect of her liability to HICBC. Ms Robson telephoned HMRC on 12 May 2021 and on 13 May 2021, HMRC raised the assessments to HICBC and penalties.

On 25 May 2021 Ms Robson wrote to HMRC to appeal against the HICBC liability and penalties.

On 22 September 2021, HMRC wrote to Ms Robson as follows:

On 8 June 2022, HMRC wrote to Ms Robson with their “view of the matter” which confirmed the assessments and penalties. Ms Robson requested a review, and the review conclusion letter dated 22 September 2022 upheld the liability to HICBC for the tax years ended 5 April 2018 and 2020, but the assessments for the other years, and all of the penalties were cancelled.

Mr Robson now appeals against the decision in the review conclusion letter.

HICBC was introduced with effect from 7 January 2013. HICBC is imposed on individuals who have an adjusted net income of more than £50,000 in a tax year where that individual or their partner or spouse is in receipt of Child Benefit. Where liability to HICBC arises in any tax year, the individual who is subject to the charge must notify HMRC of their liability to income tax pursuant to s7 TMA.

  Until the Finance Act 2022 ("FA 2022") came into force on 24 February 2022, section 29(1)(a) TMA 1970 provided, as far as relevant to this appeal, that:

Subsections (2) and (3) of section 29 TMA only apply where the taxpayer has made and delivered a return and do not apply in this case as Ms Robson did not make a self-assessment tax return in the years assessed.

In relation to assessments under section 29 TMA to collect HICBC a series of decisions relating to an appeal brought by Jason Wilkes (ultimately confirmed by the Court of Appeal in HMRC v Wilkes [2022] EWCA Civ 1612 ("Wilkes")) held that HICBC was “neither ‘income’ nor even charged on income” nor was it “income which ought to have been assessed to income tax” or an “amount which ought to have been assessed to income tax” (see Wilkes at [29]). Accordingly, HICBC could not be assessed under section 29(1)(a) TMA.

Section 29(1)(a) TMA 1970 was amended by s97 FA 2022 to read as follows:

The new wording has retrospective effect but that is subject to an exception for discovery assessments in respect of HICBC in relation to which notice of appeal had been given to HMRC on or before 30 June 2021 which met certain conditions. The relevant provisions in section 97 are as follows:

In summary, the retrospective changes made by s97 FA 2022 do not apply to an appeal that was made on or before 30 June 2021 which concerned the issue identified in the decisions in Wilkes and that issue was raised by a party or this Tribunal before that date or the appeal was subject to a temporary pause on or before 27 October 2021 because of that issue.

As Ms Robson’s appeal was notified to HMRC before 30 June 2021, we need to consider whether the exception in s97(6) applies. For this to apply:

We find that the exception in s97(6) applies to Ms Robson for the following reasons:

Ms Aziz submits that the letter of 9 September 2021 did not amount to the notification of a temporary pause as the letter stated that the assessments raised are still due to be paid. HMRC had not therefore suspended work on the appeal for the purposes of s97(8)(c) or paused it for the purposes of s97(6)(b). Ms Aziz referred us to the case of Niewiarowski [2023]UKFTT 649 (TC), in which the Tribunal held that a similar letter to the one sent to Mr Robson did not amount to a “temporary pause”. However, in the case of the letter sent to Mr Niewiarowski, the letter only “paused” the liability to penalties (see paragraphs [29] and [30]). This is a critical difference, and distinguishes Niewiarowski from this appeal. The letter to Ms Robson does state that the assessments to HICBC are still due. But we find that this reflects and restates HMRC’s view that Wilkes was wrongly decided, in order that Ms Robson should not be under a misapprehension that the impact of the decision of the Upper Tribunal was to relieve her of any HICBC liability pending the final determination of Wilkes. We find that the letter communicates the fact that HMRC are suspending work on Ms Robson’s appeal pending the final determination of the Wilkes case. We find that there was a “temporary pause” in relation to both the assessments to HICBC and the penalties in respect of Ms Robson’s appeal.

We find that HMRC’s assessments to HICBC are not relevant protected assessments for the purposes of s97 FA 2022. As a consequence, the amendments made to s29 TMA by s97 FA 2022 do not apply to the assessments under appeal.

The decision of the Court of Appeal in Wilkes is therefore engaged, and the assessments under appeal are therefore invalid.

The appeal is therefore allowed.

We are concerned that the “Generic Bundle” filed with the Tribunal and provided to Ms Robson is out of date, and a number of key Tribunal decisions are missing from it, in particular the decisions of this Tribunal in Niewiarowski [2023]UKFTT 649 (TC) and Hextall [2023] UKFTT 390 (TC). Although Hextall had little relevance to the facts of this appeal, Ms Aziz made express reference to Niewiarowski in the course of her submissions. We had to pause the hearing to allow a copy of the decision on Niewiarowski to be emailed to Ms Robson and to give her time to consider the decision (we signposted her to the relevant paragraphs). This is unacceptable behaviour on the part of HMRC. The SRA Code of Conduct states the following at paragraph 2.7:

Basic fairness requires HMRC to provide copies of authorities on which they rely to the Tribunal and to the other parties. This is particularly the case in circumstances where the other party is not represented (as is the case in this appeal).

Ms Aziz’s explanation for her failure to include Niewiarowski in the bundles was because the decision had not been released at the time the bundles had been prepared. This is not an acceptable excuse. Niewiarowski was not raised by Ms Aziz as a response to an unexpected legal point raised by Ms Robson in the course of her submissions. Niewiarowski was raised by HMRC in the course of their submissions on whether their letter gave rise to a temporary pause. We note that Ms Aziz represented HMRC in Niewiarowski and so would have been aware of the decision from the moment it was released on 14 July 2023. She had plenty of time to either update her bundle or send a copy of the decision to the Appellant and the Tribunal. This would have avoided the understandable anxiety of Ms Robson when suddenly taken by surprise at Ms Aziz’s reference to this decision during the course of the hearing.

If Ms Robson had professional representation, we would have considered exercising our powers under Rule 10 to award costs in favour of Ms Robson in respect of the unreasonable conduct of HMRC. However, as Ms Robson was unrepresented, and we were able to deal with the case by pausing the hearing (and the hearing finished within the allocated time), any additional costs incurred by Ms Robson would be negligible. In these circumstances, an award of costs would serve no purpose.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.