TC09631 - [2025] UKFTT 01072 (TC)

The first question is, who is an officer of the board.

The Child Benefit Office (CBO) is a department of HMRC.

Section 118 TMA 1970 defines “the Board” as “the Commissioners of Inland Revenue”.

Section 1 of Commissioners for Revenue and Customs Act 2005 (“CRCA”) allows for the appointment of Commissioners for HMRC.

Section 2 of CRCA 2005 sets out the meaning of an “Officer of Revenue and Customs” as follows:

“2 Officers of Revenue and Customs

(1)

The Commissioners may appoint staff, to be known as officers of Revenue and Customs.

(2)

A person shall hold and vacate office as an officer of Revenue and Customs in accordance with the terms of his appointment (which may include provision for dismissal).

(3)

An officer of Revenue and Customs shall comply with directions of the Commissioners (whether he is exercising a function conferred on officers of Revenue and Customs or exercising a function on behalf of the Commissioners)”.

Section 7 of CRCA, and the accompanying schedule, make it clear that Officers of HMRC have responsibility for matters which include Child Benefit.

In the Further Submissions, HMRC concede that staff of the CBO, meeting the relevant conditions in CRCA, may be considered Officers of the Board.

Miss Halfpenny observes that staff in the CBO deal only with child benefit and do not have responsibility for income tax or capital gains tax. Similarly, an officer in an income tax department would not have responsibility for administering child benefit.

At the hearing, Miss Halfpenny submitted that notification to the CBO was not notification to HMRC and referred to the case of Daniel Simmonite v HMRC [2023] UKFTT 00721 (TC) which also concerned a failure to notify liability to HICBC. The Tribunal said at [45]:

“45.

Whilst we can understand why Mr and Mrs Simmonite might have a genuine belief that notification to HMRC's Child Benefit Office satisfied any obligation they might have to notify HMRC, we find that – as a matter of strict law – it did not. The notification made on the phone by Mrs Simmonite to the Child Benefit Office was to stop payment of child benefit. We find that Mrs Simmonite told the officer to whom she spoke that she stopped her claim because of a liability to HICBC. However, we find that notification to the Child Benefit Office cannot be treated as notification to HMRC for the purposes of s7 TMA . HMRC undertakes a wide range of functions, some of which do not relate to the assessment and collection of tax (such as the administration of child benefit, SMP and SSP, and childcare payments). Given this wide range of functions, we find that notification under s7 can only be treated as effective if made to the correct department within HMRC.”

With respect, we do not agree. Section 7 provides:

“7(1) Every person who

(a)

is chargeable to income tax … for any year of assessment, …

(b)

… shall … give notice to an officer of the Board that he is so chargeable”

There is no requirement that notification must be given to a specific officer or an officer in a specific or relevant department. The requirement is simply to give notice to an officer of the board.

While the data recorded in one department may not automatically be shared with other departments, data can be and is shared where it is relevant. As set out at [33] onwards above, Officer Savory was able to make his “discovery” by cross-referencing the household’s income tax data with the data provided by the CBO, thereby establishing that the Appellant was liable for the HICBC. Had such a programme been implemented in 2013, HMRC could have determined who was liable for the charge from the outset, avoiding the need to recover the tax some years later, the shock to taxpayers being presented with unexpected assessments to tax, interest and penalties and the time and resources spent on the many appeals to this Tribunal.

We conclude that a staff member of the CBO is an officer of the board under the CRCA and accordingly, notification of liability to the CBO is capable of being notification to an officer of the board for the purposes of section 7 TMA.

HMRC further submit that the information provided by the Appellant did not amount to “giving notice”. Miss Halfpenny argues that the taxpayer must inform HMRC of their chargeability to income tax. She says the purpose of Ms Zefi’s February 2018 call was to stop receiving child benefit, not to notify chargeability for a particular year of assessment.

She further submits that the information provided was not sufficiently clear to form the basis for the issue of a notice to file or assessment. She argues that it was unclear whether the income figure mentioned was the total amount received in the year, or the headline rate and it might be that her income would be less in the following year and below the threshold so the officer would not know whether a notice to file was required for either 2017/18 or 2018/19.

The purpose of the telephone call was to inform the CBO of a change in circumstances as the Appellant believed that she was no longer entitled to child benefit as her income “is above 50,000 now”. The Appellant’s purpose is not however relevant to whether she gave notice of her liability to tax. We consider that HMRC have taken too narrow a view of giving notice. In our view, a person gives notice of their liability if they provide information to HMRC such that HMRC is able to conclude that a liability to tax arises. In the course of the February 2018 phone call, Ms Zefi informed the HMRC officer that her income exceeded £50,000 but was less than £60,000. Having reviewed the transcript of the conversation as a whole, we find that the mutual understanding was that Ms Zefi’s income for the year (2017/18) was over £50,000. The officer explained in some detail that the consequence, if the Appellant chose to continue receiving child benefit, was that she would be subject to a tax charge which had been brought in in 2013 which would claw back a percentage of the child benefit where her income was between £50,000 and £60,000 and that the tax would claw back 100% of the benefit if her income exceeded £60,000. The officer also explained that Ms Zefi needed to fill in a self-assessment tax return in order to pay the tax and on the basis that this was the first year when tax was due set out the deadlines for submitting the return on paper or electronically.

We find that by the end of, and as a result of, the conversation of 18 February 2018, an officer of the board was aware that Ms Zefi’s income for the 2017/18 tax year exceeded the HICBC threshold and that she was therefore liable for the HICBC charge for that year.

We find that Ms Zefi gave notice to an officer of the board that she was liable for income tax in accordance with section 7 TMA.

Although notice must be given where a person is chargeable to income tax “for a year of assessment” it would be impractical if a taxpayer has to give a fresh notification each year. In practice, once a taxpayer is in the self-assessment system, HMRC sends a notice to file each year unless and until the taxpayer indicates they do not need to complete a tax return. Similarly, we find that once a taxpayer has notified a new source of liability to income tax, the presumption of continuity applies so that they do not have repeatedly to notify that source to HMRC. It is assumed the source continues until the taxpayer informs HMRC that the source has ceased to be taxable or ceased to exist.

HMRC’s next point is that, even if the phone call did constitute notice, it did not meet the formal requirements as it was not in writing as required by the definition of “notice” in section 989 Income Tax Act 2007. Section 989 provides, so far as material:

“notice” means notice in writing…”

The definitions in section 989 apply “for the purposes of the Income Tax Acts”.

The schedule to the Interpretation Act 1978 defines “the Tax Acts” as the Income Tax Acts and the Corporation Tax Acts”.

The same schedule defines the “Income Tax Acts” as “all enactments relating to income tax, including any provisions of the Corporation Tax Acts which relate to income tax.”

Section 118 TMA defines “the Taxes Acts” as meaning

“this Act [the TMA] and:

(a)

The Tax Acts…”

It follows that the TMA is not one of the Tax Acts and so cannot be one of the Income Tax Acts. Therefore, the definition in section 989 Income Tax Act 2007 does not apply to the TMA.

Miss Halfpenny has not provided any other reference to a requirement for writing, and we find that notice under section 7 TMA may be given orally; there is no requirement that the notice be in writing.

Finally, HMRC argue that if the telephone call did amount to notice to an officer of the board, it was given outside the “notification period” which is defined in section 7(1C) TMA as follows:

“7(1C) In subsection (1) “the notification period” means

(a)in the case of a person who falls within subsection (1A), the period of 6 months from the end of the year of assessment, …”

HMRC submit that the “notice” given on 18 February 2018 was too late for the 2016/17 tax year and too early for the 2017/18 tax year and the 2018/19 tax year and therefore could not be a valid notice for the 2017/18 tax year and the 2018/19 tax year. We agree that the notice was too late for 2016/17, having been given, more than ten months after the end of the tax year.

HMRC’s approach assumes that the notification period begins on 6 April immediately following the tax year in question and ends six months thereafter. That is, notice cannot be given before the end of the tax year, even when it is apparent during the course of the tax year that a liability arises. This interpretation clearly creates absurd results. If HMRC’s interpretation is correct, it means where, for example, a taxpayer knows they have a liability for a tax year and gives notice to HMRC on 1 April within the tax year, they are to be regarded as not having given notice and could be assessed to penalties for their failure to do so! This absurdity cannot have been intended.

The purpose of section 7(1C) is to impose a time limit by which a taxpayer must notify HMRC of their liability to tax. In our view, the better construction of section 7(1C) is that the “notification period” sets the end date by which the taxpayer must notify HMRC of their liability, but that does not preclude the taxpayer from giving a valid notice before the end of the tax year.

In summary, we find that:

Accordingly, we find that Ms Zafi gave notice of her liability to the HICBC within the notification period for 2017/18 and, applying the presumption of continuity, for 2018/19.

Accordingly, we find that Ms Zafi gave notice to an officer of the board of her liability to the HICBC within the notification period for 2017/18 and, applying the presumption of continuity, for 2018/19.

Ms Zefi did not therefore fail to meet her obligation under section 7 TMA and so the penalties for failure to notify assessed under schedule 41in relation to 2017/18 and 2018/19 are not due.