This works

{-# Language PolyKinds, TypeInType #-}

import GHC.Exts (TYPE, RuntimeRep)

class        A (a :: TYPE rep)
class A a => B (a :: TYPE rep)

instance A b => A (a -> (b :: TYPE rep))
instance B b => B (a -> b)

but the moment you add (b :: TYPE rep) to the last line it stops working

-- t3I7.hs:9:10-40: error: …
--     • Could not deduce (A b)
--         arising from the superclasses of an instance declaration
--       from the context: B b
--         bound by the instance declaration at /tmp/t3I7.hs:9:10-40
--     • In the instance declaration for ‘B (a -> b)’
-- Compilation failed.

{-# Language PolyKinds, TypeInType #-}

import GHC.Exts (TYPE, RuntimeRep)

class        A (a :: TYPE rep)
class A a => B (a :: TYPE rep)

instance A b => A (a -> (b :: TYPE rep))
instance B b => B (a -> (b :: TYPE rep))