CTC Disabled Child Element - is it worth appealing?

Hi, I have a client on CTC who’s child was awarded HC DLA on 19/11/2021, with the claim starting on 06/08/2021. She notified CTC of the award on 05/01/2022, so slightly outside the time limit. Delay was due to her own mental health difficulties - severe anxiety, she isn’t good on the phone. They are refusing to backdate it to the start of the DLA award. I’ve done a recon and explained the circumstances but they haven’t changed the decision. Is there any scope for appealing? I know the regs are very clear about the one month time limit for notifying, but just wondered whether anyone had had any success with challenging this?

Hi PollyT

It is certainly worth pursuing and we have heard of success in getting backdating at HMRC’s discretion, as the government has confirmed that the child’s DLA award shows up on their computer system and the disabled child element should be awarded automatically. See autumn statement 2016 (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/571402/Policy_Costings_AS_2016_web_final.pdf ) :

“It is the customer’s responsibility to inform HMRC that they receive DLA for their child. However it is HMRC’s practice to take data from Department for Work and Pensions (DWP) about such children and update the customer’s CTC awards automatically.”

HMRC has since said “The other route is provided as a back-up to claimant notification. Under this process DWP inform HMRC of the start and end dates of the disability benefit award. HMRC then uses this information to check claimants are receiving the correct entitlement and adjust the tax credits award, where appropriate. Crucially as the information is not based on claimant notification the tax credits award can only be adjusted from as far back as the start of the tax year in which the DWP notification is received.”

However this can be quite a struggle so worth appealing as well, although there is a risk that it may get bogged down in technicalities. It would help if HMRC identified the section of the Tax Credits Act it used to make the decision:

Section 15 says “Where notification of a change of circumstances increasing the maximum rate at which a person or persons may be entitled to a tax credit is given in accordance with regulations under section 6(1), the Board must decide…”

Section 21C says HMRC “must review a relevant decision if they are notified (whether in writing or otherwise) within the period mentioned in subsection (3)— [the period of one month beginning with the day on which the person’s claim for the benefit is determined in that person’s favour]

It is possible neither of these should apply because the notification was not in accordance with the regulations/outside one month, or if they can apply at HMRC’s discretion then there is nothing in these powers that stipulates the subsequent award of the element has to be limited.

Section 16 provides a wide power to amend an award if HMRC has “reasonable grounds for believing—
(a)that the rate at which the tax credit has been awarded to him or them for the period differs from the rate at which he is, or they are, entitled to the tax credit for the period” and there is no reason why this cannot be used in the claimant’s favour to establish the correct entitlement. So a FTT judge may be willing to replace HMRC’s decison with one made under this section and allow full backdating.

If it is not resolved by next April, then request a MR and appeal against the final decision as well - because the in-year appeal will become redundant, and the final decision allows another opportunity to establish the correct entitlement for the whole year.

Mark