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

Notional Entitlement and the policy of only applying it once per customer -> Challenging this

RichardP
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Citizens Advice Cardiff and Vale

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Total Posts: 15

Joined: 8 June 2016

Hi would be grateful for any thoughts on this.

Client has overpayment of Tax credits amounting to over 25 grand.

This arose because his wife is a person from abroad and she was not added to his claim. It would’ve made no material difference as he has no records to public funds.

Client is blind and therefore did Tax credits renewal forms on the phone rather than on paper and was not alerted to the fact that this could be a change of circumstances that he should report.

I requested national entitlement – but this was refused on the basis that he already had notional entitlement applied once.

This turns out to be from a previous relationship and his wife had reported this. This was a different set of circumstances as his wife wasn’t a person from abroad


I have requested a freedom of information request for the policy relating to HMRC only being able to apply notional entitlement once. This Clearly used to be online but if you go to the link it no longer exists

They came back with a practitioner guide to applying the policy rather than the policy itself. This states that they can only apply notional entitlement once per customer. I have attached this.

I am going to do two strands to challenging the decision. –  I have a second-tier complaint refusal so will be going to the adjudicator.

I have also started drafting a pre-action protocol letter for a judicial review - so I haven’t got anybody to take on the case at present as the client has his own property and therefore would not be able to get legal aid for judicial review – even though he is on universal credit.

My current argument for the client is that as it’s a new relationship he will be considered a different customer from the previous relationship and therefore a second notional entitlement should be able to be applied. I think this might be bending things a bit. I really need to see the original policy document for both national entitlement and the fact that you can only apply at once. But so far I have not been able to find these.

Unfortunately I think it’s likely that the adjudicator will not uphold the complaint as HMRC will be within their rights to implement their policy. I really need to see the originals so I can see whether the intention of the policy was honoured and whether there is more discretion open to them then they have exercised.

I have pasted what HMRC sent me below

Step 6

Note: Notional entitlement will only be applied once. If the customer has previously reported a late

household breakdown and we have applied notional entitlement to reduce the overpayment they

will not be eligible to have notional entitlement applied to their latest household breakdown claim.
OFFICIAL
If the customer has not previously received notional entitlement due to a household breakdown, go to Step 7.

 

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Mark Willis
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Welfare rights worker - CPAG in Scotland

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Joined: 17 June 2010

Hi RichardP

Offsetting notional entitlement has to be the longest-running battle with HMRC - I don’t think they ever really grasped the principle, that is exercise of discretion to reflect true loss to the public purse (ie £0 in many cases).
The last official response I remember is summarised in this document which was circulated to consultation group members - but the promised clarified rules and improved guidance never materialised.
There is more guidance in https://www.gov.uk/hmrc-internal-manuals/tax-credits-manual/tcm0228220 & https://www.gov.uk/hmrc-internal-manuals/claimant-compliance-manual/ccm15720 but half of this links to sections that have been removed from public view, and it is also out of date as refers to the necessity of making a new tax credits claim in the correct capacity, which is clearly no longer possible.
There is no real justification for the rule that it can only be applied once, especially if it was a different claim/circumstances and seems to be fettering of discretion.
Mark

[ Edited: 6 Dec 2022 at 03:02 pm by Mark Willis ]

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Tom B (WRAMAS)
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WRAMAS - Bristol City Council

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For what it’s worth I’ve had a similar case recently and after battling with HMRC without getting anywhere, I assisted client to raise with his MP and linked them to relevant guidance and it was resolved about 3 days later.

Mark Willis
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Welfare rights worker - CPAG in Scotland

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Total Posts: 142

Joined: 17 June 2010

Great result, Tom. If that doesn’t work, could try CPAG judical review project mailto:jrproject@cpag.org.uk https://cpag.org.uk/welfare-rights/judicial-review
Also the Adjudicator has taken an interest in this issue in the past - see p.17 2017 report and p.17 2018 report

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RichardP
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Citizens Advice Cardiff and Vale

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Total Posts: 15

Joined: 8 June 2016

THanks for getting back to me all. I need to see the original policy document.

Question for Tom - out of interest were HMRC also arguing with your client that they had already applied NE once before ?