Toolkit

Reference materials: Tax credits 'Inside track'

Payments, awards and renewals

Questions asked during a telephone renewal: Representatives asked HMRC what questions claimants are asked during a telephone renewal, and whether they check all details or ask a more general question about whether there has been any change of circumstances. Representatives felt that specific questions would pick up any wrong elements and thus stop overpayments from crossing more than one tax year.

HMRC stated that the helpline scripts are proactive in that customers are asked if all of their details are correct before individual details are captured. However, advisers do not go through the form question by question to check everything is correct. There are also some safeguards built into the tax credits computer system around the capture of income and employment details. If details on the renewal form are incompatible with those on the original claim form, an on-screen warning message will be displayed to the helpline adviser when they are capturing these details. This enables the adviser to confirm the correct details with the customer before continuing to capture the renewal.
[Victoria Todd, LITRG, response 22 June 2009]

Manual payment letters: Representatives asked HMRC if they could provide the wording that is used when claimants are paid by manual payments. More specifically representatives were interested in the wording relating to overpayments.

HMRC provided representatives with a copy of TC857P, which is the letter that is sent to claimants when they are to be paid via manual payments. The wording states:

'We will make payments direct into an account as soon as we are able to do so. If you receive a payment by cheque and a direct payment for the same period, this may result in you being overpaid tax credits. When we work out the final amount of tax credits due to you after the end of the tax year, we will include all payments made to you. If we have paid you too much, we may then ask you to pay any overpayment back.'
[Victoria Todd, LITRG, response 19 November 2008]

Non-renewals: Representatives asked HMRC to clarify the legislative basis for the recovery of provisional payments when renewal forms were not returned. HMRC stated that:

'Section 24 (4) Tax Credit Act 2002 (TCA) enables HMRC to continue making payments of tax credits in certain circumstances in a new tax year where there has been an award in the previous tax year. These payments are treated as payments of tax credits for the next tax year (section 24 (5) TCA). The circumstances in which the payments are made are set out in Regulation 7 of the Tax Credits (Payment by the Commissioners) Regulations (SI 2002/2173) (the Regulations). Whilst section 24 TCA empowers HMRC to make provisional payments it does not of itself give entitlement to the payments, as other provisions of TCA explicitly make entitlement dependent on the making of a claim and the meeting of certain conditions.
The regulations provide that payments can be made where a claim for the new tax year has not been made and no decision under section 18 has been made in respect of the previous tax year. This happens when a section 17 notice has not been returned. As you know, if there has been no response to a section 17 notice by the first specified date, HMRC will finalise the previous year's award under section 18. At this point entitlement to provisional payments ceases, as the second test in regulation 7 (3) of the Regulations - that no decision under section 18 has been made – is no longer satisfied.
You have asked whether there is a right of appeal against the decision to cease paying provisional payments. The decisions against which an appeal can be made are detailed in section 38 TCA and this does not include a decision to cease paying provisional payments. As we set out above, this happens automatically, because one of the conditions which entitles a person to such payments is no longer satisfied.
HMRC accept that Section 28 (1) TCA refers to determinations under sections 18 to 21 and that in the case of provisional payments there can be no such determination, as there has been no claim to tax credits. However, our view is that these provisional payments are to be treated as an amount of tax credits paid. As they exceed the person's entitlement, which is zero, then the totality of the payments fall to be an 'overpayment' within the meaning of section 28 TCA and are accordingly recoverable'
[Victoria Todd, LITRG, response 18 July 2008]

4 week run on: Representatives asked to see a copy of the letter sent to claimants when they are eligible for the 4 week run-on of Working Tax Credit. Representatives on the whole felt the letter was confusing and badly worded and that changes should be made. Several representatives sent comments regarding the letter.

Representatives also queried whether a new claim for WTC can be made during the 4 week run on. HMRC confirmed that they can accept a new claim at that time. Representatives also sought clarification of the position for free school meals during the 4 week run-on. HMRC confirmed that there is entitlement to free school meals during that period (providing other criteria is met).

[Victoria Todd, LITRG, response 14 February 2008]

Renewal forms: Representatives asked HMRC whether both parties to a joint claim need to sign a renewal form. HMRC confirmed 'that it is normal practice for us to expect two signatures on a joint Annual Declaration and a joint claim. But there is provision in the regulations for us to accept only one signature on the declaration where there are exceptional circumstances, such as hospitalisation, as you have mentioned.'.

[Beth Lakhani, CPAG, 11 January 2008]

Royal Mail strike: HMRC have confirmed that the TCO arranged to post out early any payments that could have been affected by the strike. Where customers experience delays despite these measures, arrangements are in place whereby they can receive payments from their nearest HMRC enquiry centre.

[Victoria Todd, LITRG, response 6 August 2007]

Updating income figures prior to renewal: Representatives queried whether claimants could report their actual income for the previous year post 6 April but prior to renewal forms arriving. HMRC confirmed that the helpline should take these new figures, however they should also inform claimants that renewal papers must still be completed.

[Victoria Todd, LITRG, response 10 July 2007]

4 Week run on regulations: Clarification was sought on who these regulations would apply to. HMRC confirmed that those who cease work altogether and those that continue to work for less than 16 hours would benefit from the 4 week run. Those that drop but stay above 16 hours per week will not benefit.

[Victoria Todd, LITRG, response 28 March 2007]

Fraud cases and payments: Representatives raised concerns about the unavailability of payments (including urgent payments) for victims of identity fraud. HMRC were asked about emergency payments in such circumstances and how long claimants must wait. HMRC have said that where a third party has hijacked a claimant’s identity, payments are suspended to avoid them going to the wrong person. HMRC said they recognise the difficulties and inconvenience caused and state they have a dedicated team to support them and assist with their claims. The claimant should go to their local office with 3 forms of ID to verify their identity and, once that is confirmed, they will get a 4 week payment whilst the claim is corrected.

[Siobhan Harding, Citizens Advice, response 16 February 2007]

Urgent payments and enquiry centres: HMRC have confirmed that helpline advisers should try and fix claimants problems, but where exceptionally the claimant cannot wait and needs immediate and urgent payment, the enquiry centre should make the appropriate arrangements. Advisers should not need to ring helpline staff to request a note is written on the case file which a claimant can refer to at an enquiry centre. This should not be necessary.

[Siobhan Harding, Citizens Advice, response 16 February 2007]

Cash cheques: Cashcheque is the new name for giro payments.

[Siobhan Harding, Citizens Advice, response 16 February 2007]