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HMRC’s review of high income child benefit charge (HICBC) penalties may have drawn a line under the immediate issue but there are important lessons that should not be forgotten.
The first is at policy level. There seems to have been a complete disconnect between the political decision to claw back child benefit from high earners and the practicalities of putting that policy into operation. Fundamentally the design of the HICBC is incompatible with the way our tax system operates in that spouses are taxed separately and most people do not complete a tax return. Something must be seriously wrong with a policy that led to HMRC opening more than 160 000 compliance checks to test whether people were complying with the rules.
The second point is that it brings into focus the extent to which people should take responsibility for informing themselves about tax changes rather than relying...
