When the rules relating to the clawback of higher income child benefit charge (HICBC) were introduced for 2013/14 onwards many commentators, including RSM, pointed out that the rules were too complex. The requirement for a child benefit claimant to register for self-assessment if the income of one parent exceeded £50,000 meant people not previously in self-assessment would need to ask for a tax return to declare the clawback.

It was perhaps inevitable that many would not realise this, leading to Failure to Notify (FTN) chargeability in each and every year in which the clawback was not disclosed. Now, five years on, it seems that appeals against FTN penalties for those who did not timeously register for self-assessment may be making their way through the appeals system.

We were therefore pleased to learn that HMRC now plans to review the FTN fines raised on various HICBC taxpayers for 2013/14, 2014/15 and 2015/16. Penalties already paid may, in certain circumstances, be refunded to the taxpayer. Using its own records, HMRC is trying to identify those taxpayers who had a reasonable excuse for the failure. Examples include people who had claimed child benefit before the new rules came in and those whose income rose above the £50,000 threshold after the changes. HMRC state that they do not plan to review penalties for anybody to whom notification letters were sent or where they claimed child benefit after the HICBC was introduced.

This is a welcome change in approach, as normally a taxpayer facing a FTN penalty must appeal it themselves and explain why they consider that they have a reasonable excuse. It is therefore encouraging to see HMRC effectively accept that these rules were too complex for the type of taxpayer they affected, and that ignorance of the law can sometimes be an excuse.

We wonder if HMRC will go on to extend this sensible approach to penalties arising in other unexpectedly complex tax areas, for instance the requirement for non-residents, making a disposal of a UK residential property, to make a separate return within thirty days of sale, even if they are due to return this at a later date within the normal self-assessment system.

At the very least, we hope this softer stance will lead to clearer thinking at an earlier stage about the potential practical ramifications of future tax law changes.