Notional Offsetting in a Full Service UC area
Client claimed tax credits as a single parent. To cut a slightly longer story short, she became a member of a couple in April 2017 and her partner was included on her ESA(IR) claim.
However, she did not notify tax credits.
In August 2018 a compliance intervention resulted in her claim as a single person being ended from 6/4/17. As she lives in a Full Service area they could not make a joint claim for tax credits. As it happened, he upped and left and she either had to, or did, claim UC herself.
Overpayments of over £12K and £4K have been raised for 17/18 and 18/19. She sent off form TC846 asking for notional offset (which would have been the full amount due to her continuing ESA(IR) but this has been refused because they did not make a joint claim for tax credits (they couldn’t, because they are in a Full Service area).
Now, I know that the tax credit guidance requires the making of a joint claim (or it seems to anyway) but I find it hard to believe that this approach has not been modified to allow for the fact that Full Service UC has arrived.
Has anyone else had similar cases and, if so, were you able to get an offset? Or is anyone aware of any new guidance on offsets?
I asked this question to the BCCG (Benefits & Credits Consultation Group) and got this reply from HMRC:
‘HMRC will consider whether to apply notional entitlement in cases where there has been a household breakdown and the individual is prevented from making a new tax credits claim because he or she lives in a Universal Credit (UC) full service area or has subsequently claimed UC following a change of circumstances.
HMRC is currently working to establish processes, forms and guidance to support notional entitlement applications from individuals affected by UC. We are developing a new form to capture relevant information from individuals affected in order to determine the notional tax credits entitlement had they been able to claim it. Individuals will need to ask us directly as we will not be able to identify potential cases through other means. However, where they have been in contact to query overpayments arising from a household breakdown we are retaining their contact details to ensure they receive the relevant information once the new process is up and running.
Lastly in cases where the overpayment has been transferred to DWP and it is subsequently determined that notional entitlement should be applied HMRC will tell DWP who will make the necessary adjustments.’
Good luck - remember it is an exercise of discretion and it is unreasonable to insist on a new tax credits claim being made as a precondition when this is no longer possible.
Many thanks Mark for the speedy and helpful reply
Just checking, is it OK to quote you when writing to Tax Credits on this case?
Hi Brian, sorry not so speedy on the follow up. Yes that’s fine and if you want to send me a message with your email I should be able to forward the reply to you.