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Reclaiming Tax Credits

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Keith S Adviser
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So will there be a greater, better or even a comprehensible explanation and possibly guidance regarding the proposed run on of legacy benefits from the 22nd July ?

AlexJ
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This is rather annoying:

https://www.rightsnet.org.uk/welfare-rights/news/item/incredibly-difficult-to-find-a-solution-to-help-those-who-lost-entitlement-to-tax-credits-as-a-result-of-applying-for-universal-credit-minister-tells-mps

Incredibly difficult? Judging by this thread, Welfare Rights advisers seem to have found a way for people to get back on tax credits, and looking at Charles’ experience, FtTs seem to agree, so the only thing that’s ‘incredibly difficult’ is that HMRC don’t seem to be allowing to make people make fresh claims for tax credits, even though legally they appear to have a right to do so.

JAS1
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Was looking at that earlier.  What are they even on about. Anyone got any clue why it is so ‘incredibly difficult’?

Also this -

“it is made absolutely clear throughout ... that a universal credit claim, and making one, will cease any existing entitlement to legacy benefits and that includes tax credits - that’s made absolutely clear in the system.’’

Liar. If it was always so clear why did they only add a warning message in May.

Andrew Dutton
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Anything is ‘incredibly difficult’ when one has absolutely no intention of doing it.

Ianb
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JAS1 - 16 July 2020 01:41 PM

Was looking at that earlier.  What are they even on about. Anyone got any clue why it is so ‘incredibly difficult’?

Also this -

“it is made absolutely clear throughout ... that a universal credit claim, and making one, will cease any existing entitlement to legacy benefits and that includes tax credits - that’s made absolutely clear in the system.’’

Liar. If it was always so clear why did they only add a warning message in May.

That was precisely my reaction when I read it.

Paul Stockton
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Charles - 29 April 2020 02:03 PM

We have a few such cases under appeal at the moment, and we finally had our first hearing on Monday, which we won. We’re waiting to see how HMRC respond to this.

Does anyone have an update on this? Has the government managed to close this loophole (assuming that’s what it is)/ has anyone but Charles had a success with HMRC or at the tribunal on this?

Charles
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Loophole hasn’t been closed yet.

We’ve had 4 cases at the FtT so far. We won (after a fashion) in 3 of them, but lost the 4th. They’ll all be heading to the UT…

Paul Stockton
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Thanks, Charles.

I looked at this case (CTC/1221/2019): https://www.rightsnet.org.uk/welfare-rights/caselaw/item/whether-single-claimant-could-avoid-prohibition

While HMRC won this one they don’t seem to have disputed that the loophole (must stop calling it that!) works for single claimants

Charles
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Yes, we referred to that case in our submissions for all the hearings we had after it was published.

Judy Scott
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This is not my usual subject so please be kind if you spot any glaring ignorance.

If a person on WTC has earnings that increase temporarily above WTC level in one year and they receive CTC can they make a new claim to WTC when income drops the following and continue to receive CTC?  Or will they be required to claim UC?

What happens in actual practice? Are mistakes made?

Ianb
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Judy Scott - 27 January 2021 11:32 AM

This is not my usual subject so please be kind if you spot any glaring ignorance.

If a person on WTC has earnings that increase temporarily above WTC level in one year and they receive CTC can they make a new claim to WTC when income drops the following and continue to receive CTC?  Or will they be required to claim UC?

What happens in actual practice? Are mistakes made?

CTC and WTC are not different benefits. they are two parts of one benefit TC. Therefore if either part is in payment the other can be added, it is a change of circumstances which does not require a new claim.

Charles
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Technically they actually do require separate claims, although HMRC do not administer it that way on their systems. However, the UC Commencement Orders specifically allow new claims for one tax credit when the claimant has an award of the other.

Also, tax credits require new claims each tax year. For that reason the Commencement Orders also allow new claims where there was an “award” the previous tax year.

As a nil award of a tax credit is still an “award”, your client can make a new claim for WTC based on that alone without even requiring them to rely on the CTC award.

Judy Scott
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Thank you both so much for this super fast reply.
Judy Scott

Ianb
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Thanks, Charles. You’ve put me straight (as always).

CAAdviser
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Charles - 20 January 2021 04:16 PM

Loophole hasn’t been closed yet.

We’ve had 4 cases at the FtT so far. We won (after a fashion) in 3 of them, but lost the 4th. They’ll all be heading to the UT…

Hi Charles

Probably a bit early yet but wondered if you had any further update on this issue?  You say you won three and lost one, but all are going to UT?  Is that because HMRC are taking it to UT on the three you won?

Couple of other questions if you don’t mind:

- when you call TC to make the claim and they refuse so you ask for that decision in writing, or do you just challenge the verbal decision to refuse the claim and quote date and time of call and person you spoke to or similar?

- What was the reason one lost?

- Are the decisions available yet? Are you able to provide links to these if you are happy to share?

Thank you!

Charles
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Of the four cases I referred to, the first HMRC have appealed to the UT, the second HMRC have received permission to appeal, but have not yet actually made the appeal, the third we have appealed to the UT, and the fourth ended up returning to the FtT and was promptly stayed pending the result of the UT cases. We have a fifth case which had a short hearing at the FtT, but was adjourned, mainly due to HMRC providing a response the night before the hearing.

So yes, they are all going to the UT because the cases we won are being appealed by HMRC, and the case we lost, we appealed. No decisions yet.

I should note that three of our cases each began as two separate appeals, one against the original closure of the tax credit award, and one about the refusal to allow a new claim. The FtT then merged them into one appeal. One of our wins was actually on the original closure, and the Tribunal did not therefore make a decision on the reclaim.

The process we have followed has been to make a claim by phone, and followed it up with a letter asking them to reconsider the decision not to accept the claim. When we get HMRC’s response to our letter (in which they refuse to do anything), we have then appealed to the FtT arguing that an MR has been carried out.

I don’t believe it would be possible to get the HMRC agent you speak to on the phone to issue you anything in writing.

Some recommend making a claim on an old claim form due to the fact that HMRC have the discretion whether to accept any claim not made on the approved claim form. We have simply argued that nowadays there is no approved claim form, and that HMRC tell anyone eligible to make a new claim (frontier workers, and, until recently, SDP claimants) to make it by phone. It is thus clear that HMRC have exercised their discretion to allow claims by phone wherever new claims can be made.
In two of the FtT cases, HMRC conceded this point after originally trying to argue it in their original submissions. However, HMRC’s submissions to the UT have brought this up again.

The case we lost was due to the FtT deciding (on the point about the reclaim) that no new claim was actually attempted. This was laughable. In fact, both parties had agreed that a claim was attempted, and the point was not argued in the submissions or at the hearing. This was one of the grounds for our appeal to the UT.

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Charles - 18 April 2021 11:04 PM

Of the four cases I referred to, the first HMRC have appealed to the UT, the second HMRC have received permission to appeal, but have not yet actually made the appeal, the third we have appealed to the UT, and the fourth ended up returning to the FtT and was promptly stayed pending the result of the UT cases. We have a fifth case which had a short hearing at the FtT, but was adjourned, mainly due to HMRC providing a response the night before the hearing.

So yes, they are all going to the UT because the cases we won are being appealed by HMRC, and the case we lost, we appealed. No decisions yet.

I should note that three of our cases each began as two separate appeals, one against the original closure of the tax credit award, and one about the refusal to allow a new claim. The FtT then merged them into one appeal. One of our wins was actually on the original closure, and the Tribunal did not therefore make a decision on the reclaim.

The process we have followed has been to make a claim by phone, and followed it up with a letter asking them to reconsider the decision not to accept the claim. When we get HMRC’s response to our letter (in which they refuse to do anything), we have then appealed to the FtT arguing that an MR has been carried out.

I don’t believe it would be possible to get the HMRC agent you speak to on the phone to issue you anything in writing.

Some recommend making a claim on an old claim form due to the fact that HMRC have the discretion whether to accept any claim not made on the approved claim form. We have simply argued that nowadays there is no approved claim form, and that HMRC tell anyone eligible to make a new claim (frontier workers, and, until recently, SDP claimants) to make it by phone. It is thus clear that HMRC have exercised their discretion to allow claims by phone wherever new claims can be made.
In two of the FtT cases, HMRC conceded this point after originally trying to argue it in their original submissions. However, HMRC’s submissions to the UT have brought this up again.

The case we lost was due to the FtT deciding (on the point about the reclaim) that no new claim was actually attempted. This was laughable. In fact, both parties had agreed that a claim was attempted, and the point was not argued in the submissions or at the hearing. This was one of the grounds for our appeal to the UT.

Thanks Charles for your comprehensive and very helpful reply. 

I am going to attempt to start this process today (wish me luck!! :-)).  I suspect that as you have done the groundwork on this one we get to the FtT the decision will also be stayed pending your UT decisions similarly to your 4th appeal, so thanks for all the work you have done on this so far.  Will feedback with our progress.  I will keep an eye out for your updates as to how things are progressing with your appeals.  Thanks again!

 

Paul Stockton
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Still no decision from the UT on this?

Charles
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Not to my knowledge.

As I understand it, there are currently two cases being considered by the UT (one where the tax credit award was terminated due to the claimant making a UC claim, and another where it was terminated due to the claimant making a “declaration of eligibility” for Tax Free Childcare).
A number of other cases in front of the UT have been stayed pending the results of those cases.

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Charles
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Interesting, thanks.

The UT have told us they hope to have some movement on the cases in front of the UT by the end of this month.

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Charles_ - 21 October 2021 02:01 PM

Interesting, thanks.

The UT have told us they hope to have some movement on the cases in front of the UT by the end of this month.

Any updates on this?

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Charles_ - 21 October 2021 02:01 PM

Interesting, thanks.

The UT have told us they hope to have some movement on the cases in front of the UT by the end of this month.

We have still not recd a response to the MR I sent HMRC back in April - client chased a few months back and was told the reply would be sent “soon”.  She has just chased again and been told that they won’t issue any response and that the same team dealing with our other TC appeal won’t issue a response to the MR until the other appeal has concluded.

Our other appeal is appealing against the decision to close the TC claim in the first place on the basis that the UC stop notice was not valid.  We won that appeal at FtT (hurrah!) but looks like HMRC are pushing that appeal to the UT, they have just requested their statement of reasons.  So it’s likely to be some time before this appeal is “resolved”.

What can we do now to get HMRC to issue an MR response (or their refusal to issue an MR response)?  I believe I have read (??) in some circumstances you can move straight to appeal if there is no MR forthcoming?  Or do we try a JR pre-action letter?  Or something else?

 

Charles
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Sorry, just saw your posts.

Unfortunately, we are still waiting for an update, with the delay apparently due to the UT judge looking at these cases being ill.

Regarding not getting an MR response, our approach has been to request the MR together with a complaint. Complaints seem to get quicker responses, which will reconfirm the decision not to allow the claim. In all our cases, the Tribunal has accepted that response as sufficient.

You can anyway expect long delays at the moment for MRs to be carried out - HMRC recently told us there was a 4-month backlog. I believe the situation has recently improved slightly, but won’t be much better.

Charles
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We have received a decision from the UT in our first case.

HMRC’s appeal was allowed. The judge was fairly dismissive of their argument that the savings only apply to renewal claims, but still held that our client could not make a new claim due to the wording in the legislation that a claim can only be made “for the next tax year”, which he interpreted as meaning for the whole of the next tax year.

This would seem to leave open an opportunity to claim at the start of April of the following tax year however.

We are considering our options on how to proceed.

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Charles - 21 December 2021 09:47 AM

We have received a decision from the UT in our first case.

HMRC’s appeal was allowed. The judge was fairly dismissive of their argument that the savings only apply to renewal claims, but still held that our client could not make a new claim due to the wording in the legislation that a claim can only be made “for the next tax year”, which he interpreted as meaning for the whole of the next tax year.

This would seem to leave open an opportunity to claim at the start of April of the following tax year however.

We are considering our options on how to proceed.


Thanks for the update Charles.  Sorry you have not had a positive outcome on this one.

What did the judge mean by “a claim can only be made “for the next tax year”, which he interpreted as meaning for the whole of the next tax year.”?

I thought we were dealing with cases where we have attempted to make a new claim in the following tax year to he previous claim ending?  So does he made claims can only be made on 06 April?  Or claims can only run for the following tax year and then end?

Thank you!

Charles
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The legislation allows claims to be made for the next tax year if there was an award in respect of the previous tax year.

In our case, we made a claim in the same tax year as that in which the previous award ended, relying on the fact that there was an award in the year before that too. The judge is saying that such a claim was not allowed as it was not for the full tax year.

Renewal claims are always for the full tax year, so they’re always fine. Potentially a non-renewal claim made at the beginning of a tax year (i.e. within a month of 6th April), where there had been an award in respect of the previous tax year, could also work.

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stevenmcavoy
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really disappointed by this.  thanks for the work in challenging this though charles.