27 Oct 2021 2:49 PM

HMRC is a bad loser – in a recent tax case on “Discovery Assessments” HMRC lost to the tax payer who had failed to pay the tax due on receipt of a child benefit when the parents were higher rate tax payers. They successfully argued that as they did not normally file a tax return there was no method for HMRC to assess the tax. The judge agreed with them. So HMRC have changed the law from today to say that they can and always could make a “Discovery Assessment”  for the tax, both for this type of income tax charge and for the tax due on payments out of pension schemes which are not otherwise caught in PAYE.

Interestingly this also caught the basic rate tax due on Gift Aid where a non taxpayer declares to a Charity that the Gift is within Gift Aid, the charity claims back the basic rate tax, but the taxpayer never had a tax liability to cover it.  HMRC now have a clear route to assess the tax due on the giver. This might seem a small point but I have clients who make regular substantial gift aid payments whilst making other tax deductible payments like pensions, so we have to check each year how much they can give without falling foul of this rule.

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