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Forum Home  →  Discussion  →  Income support, JSA and tax credits  →  Thread

opinions/thoughts on a fairly unusual tax credit situation

stevenmcavoy
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Welfare rights officer - Enable Scotland

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basics of the situation are that the client had entitlement to tax credits as a lone parent.

they then inherited a significant sum of money. They have told me they were advised by a financial adviser that this would take them out of entitlement to means tested benefits.
.
the client then contacts HMRC and tells them not that they have this capital (and got told thats fine) but that they will be working and earning too much for tax credits…no i dont know wny either.

the only decision notice I have seen so far is the decision to recover the overpayment for tax year 20/21. I have asked them to get me a copy of the final decision.

Given this isnt official error (from what I can see), any ideas if there are grounds to challenge this given the client gave them incorrect info? ideally I would like the tax credit claim to continue as well she they cant claim uc due to the capital.

revision on discovery due to neglect?

Mark Willis
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Hi Steven

It is a tricky situation, but it sounds like it might not yet be too late to get the final decision for 2020/21 opened up and ask HMRC to revise the decision based on the correct facts. I think it would be worth putting in a late MR (review under s21A/B) of the final decision, and appeal if necessary. Even if the decision was based on incorrect information that the claimant was working and earning too much for tax credits, this should have resulted in a ‘nil award’ and entitlement can be renewed for 2021/22 and an award based on current year estimate (after disregard).

The revision on discovery power under TCA s.20 is only possible after the enquiry window (under s19) has ended, which is a year after the final decison - but the problem with these is you are relying on HMRC to use its power at its discretion.

Mark

stevenmcavoy
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Welfare rights officer - Enable Scotland

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thanks mark. much appreciated.

stevenmcavoy
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Welfare rights officer - Enable Scotland

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so it looks like the circs are slightly different than what I originally had been told/thought.

the provisional and final award for 20/21 balance out so no overpayment. there is, however, a letter stating “you have been withdrawn” from tax credits so my assumption is the overpayment is in fact the period between the end of the tax year and the award being withdrawn.

Im hoping for some pointers on the best way to go in light of this new information, the best outcome is getting the tax credits up and running again still as this both takes away the overpayment and gives on-going payments.

I know there is a thread on here elsehwere arguing its possible to make a new claim (which I think applies here) but I know those cases are subject to UT decison pending….is there another route? Challenge the withdrawal decision?

LITRG
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Head of Low Incomes Tax Reform Group

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stevenmcavoy - 04 November 2021 06:23 PM

so it looks like the circs are slightly different than what I originally had been told/thought.

the provisional and final award for 20/21 balance out so no overpayment. there is, however, a letter stating “you have been withdrawn” from tax credits so my assumption is the overpayment is in fact the period between the end of the tax year and the award being withdrawn.

Im hoping for some pointers on the best way to go in light of this new information, the best outcome is getting the tax credits up and running again still as this both takes away the overpayment and gives on-going payments.

I know there is a thread on here elsehwere arguing its possible to make a new claim (which I think applies here) but I know those cases are subject to UT decison pending….is there another route? Challenge the withdrawal decision?

Sorry Steve, i have just seen this.

What date is the withdrawal letter? They are really hard to challenge as it should say if you want to stay in tax credits to contact them. The legislation allows them to then withdraw the person if there is no contact. So i don’t know what could be challenged if they didn’t and HMRC didn’t make a mistake. However, i am surprised they fell so quickly into the withdrawal group. What is the rest of the timeline? When did they phone HMRC and say their income had increased?

 

Charles
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It sounds like this is a case where the client has voluntarily withdrawn before the renewal was processed, and not as a result of a TC1015 letter.

Unfortunately, I can’t really see any way out (besides that possibility of making a new claim, which you mention).

EDIT: By the way, the fact that a provisional award for 20-21 and the final award for 20-21 are the same does not necessarily mean there was no overpayment in that year (or even brought forward from an earlier year for that matter).

[ Edited: 20 Nov 2021 at 09:49 pm by Charles ]