Toolkit

Reference materials: Tax credits 'Inside track'

Checks, enquiries and other compliance

Pre award delays: Representatives have raised a number of cases where awards are delayed up to several months. Some of these cases have occurred because a case has been sent to compliance due to a verification failure. HMRC responded that compliance aim to carry out such checks within 10 weeks. Representatives raised the issue again at the November TCCG and gave examples of how this was affecting claimants by forcing them out of work when they could not pay childcare for such a long period or in some cases getting into debt and defaulting on rent.

HMRC have assured representatives that compliance activity would be carried out as quickly as possible. There are special procedures in place that should alert Compliance Officers to any cases that have come via the fast track from Job Centre Plus. This means these cases will be risk assessed immediately. Pre award compliance checks on all cases will continue under normal timescales if deemed necessary.

[Victoria Todd, LITRG, response at TCCCG 16 October 2008]

Compliance evidence: Representatives asked why it is necessary for the Revenue to see extensive records of a person's use of loans and credit card as recently requested in a compliance related letter. HMRC responded that there are a number of circumstances where it may be relevant for a Claimant Compliance Officer to ask to see a customer’s bank and credit cards records including, for example -

End of enquiry - they would be looking at them then to determine ability to pay;
Enquiries into income - where there are doubts as to the level of income. Considering the amount returned in relation to expenditure and other sources of 'income – including loans/debt – would be a normal exercise;
Living together cases - it is often the case that certain household or personal bills can only be paid by direct debit from a bank or credit card, for example Sky subscription. Where it is suspected that there is an undeclared partner it is reasonable for the CCO to consider what household payments are made from where;
Childcare costs - where these are high in relation to income then again it is reasonable to consider where they are being paid from and how.

In all of the above the Claimant Compliance Officer is not specifically looking at how a person budgets but whether, on the available evidence, their claim makes sense.
[Beth Lakhani, CPAG, response 7 January 2008]

Notional Offsetting: Representatives sought clarification of when the new offsetting guidance would be applied – particularly when an error is made with regards to reporting a change of circumstances. HMRC stated that under current guidelines, if the claimant makes an incorrect claim at the outset and it was as a result of a genuine error, then notional entitlement can apply.

However, it does not apply where there was a correct claim but there was then a failure to report a change of circumstances, even if there was an understandable reason why the change was not reported. Claimants are required to tell HMRC about changes in their household, and if they are not sure if the change affects their award they can ring the helpline to find out.

[Frances Corrie, Taxaid, response 7 January 2008]

Compliance timescales: Representatives asked HMRC about the target time for compliance investigations. HMRC stated that Unless Organised Fraud activity is suspected, Compliance teams aim to send out initial letters to customers within ten days of cases being referred-to them. Taking into account postal times, HMRC would therefore expect a customer to receive an explanatory letter within 15 days. The Compliance team then aim to complete their intervention within 10 weeks.

The letter sent by the Compliance team gives the customer the contact details of the compliance officer dealing with their case. If the customer has not received such a letter, the customer should contact the Tax Credit Helpline on 0845 300 3900.

[Kate Bell, One Parent Families, response 2 November 2007]