reinstating tax credits after child returns from foster care

Details are limited but client is on legacy benefits (ESA SG and HB), he was claiming CTC for his daughter. His daughter was placed in foster care for over a year (mid 2021) - client failed to notify of this changed which has generated an overpayment. Client was advised by CTC that he could restart his claim when his daughter returned.

Daughter returned mid 2022 and has since been advised he would need to claim UC.

Cl has applied for PIP and DLA for his daughter - both of which would make him better off on legacy should he be successful.

Can anyone advise eligibility to reinstate CTC?

Hi Tara
I think this would only be possible if he was still entitled to CTC for another child living with him, or if he was still entitled to Working Tax Credit throughout the period. But from what you have said that doesn’t seem to be the case. If the child was looked after by the local authority and cost of accommodation or maintenance is paid or partly paid out of local authority funds or any other public funds, then he would not be responsible for the child so not entitled to CTC, and the award would terminate.  https://www.gov.uk/hmrc-internal-manuals/tax-credits-technical-manual/tctm02211

There was an argument that the renewal provisions (now found in https://www.legislation.gov.uk/uksi/2014/1230/regulation/6A ) could allow a new claim for the following tax year following a break in entitlement under para 7:

(7) Paragraph (1) does not apply to a claim for a tax credit where a person has or had, or persons have or had, an award of child tax credit or working tax credit in respect of a tax year and that person or those persons makes or make (or is or are treated as making) a claim for that tax credit for the next tax year.

However, recent caselaw HMRC v RS (No 2) (TC): [2022] UKUT 246 (AAC) (https://www.gov.uk/administrative-appeals-tribunal-decisions/her-majestys-revenue-and-customs-v-springer-no-2-tc-2022-ukut-246-aac) held “The phrase “for the next tax year” involves a reference to the next tax year as a whole, from 6 April in one year to 5 April in the following year, and not to a part tax year.”

So if he was entitled in respect of 2021/22 (arguably a part year counts here) and daughter returned on or before 6 April 2022, it could still be arguable he made a claim “for the next tax year” of 2022/23 as a whole - but this would likely involve a protracted appeal with no guarantee of success, so realistically he may be better advised to claim UC and perhaps pursue complaint/compensation about misleading advice from HMRC and lower amount for disabled child in UC.

Mark

Thanks for your help Mark 😊