Tax credit regulation 26 A

I have a client whose child has a longterm disability - previously on DLA, now PIP. Client has transferred to UC and is receiving the correct Disabled Child element in her new award.  However, she never notified the Tax Credit Office about her child’s previous DLA award.  I can see from CPAG that the fact that her Tax credit award has ended would not be a problem, but would the one-month limitation from the date of notification absolutely rule her out of any backdating of this element in her Tax Credits? Are there any possible exceptions?

Hi Ruth

HMRC will say that a backdated award of disabled child element is only possible under s21C of the Tax Credits Act if the claimant reported the award of DLA within one month of being notified – and this does not allow for any extension for good cause.

However, there are good arguments that they should backdate at least for the the current tax year if there was an award for 2024/25, the previous tax year 2023/24 - final decision made after 6 April 2024, and possibly 2022/23 - final decision made by 31 July 2023, so may still be within 13 months for appeal. They could use s19 enquiry powers to revise decisions within one year, or the claimant can appeal.

You can point out that it is HMRC’s practice to take data from the DWP about children in receipt of DLA and update the customer’s CTC awards automatically – as stated in Autumn Statement 2016 p.32 https://assets.publishing.service.gov.uk/media/5a80e284e5274a2e87dbc5d4/Policy_Costings_AS_2016_web_final.pdf

It is still the claimant’s responsibility to inform HMRC that they receive DLA for the child, and caselaw has found HMRC’s failure to check is not an official error. KI v HM Revenue and Customs (TC): [2023] UKUT 212 (AAC).

HMRC have said they would pay from start of current tax year when they receive info via DWP – if they would do this when notified by DWP it seems grossly unfair not to do so when notified by claimant. Also, the final decision for the previous year (and the one before that if still in time) can still be changed for any reason – this is what happened in the above case and in AM v HMRC (TC) [2015] UKUT 0345 (AAC) – HMRC paid current and previous years as explained in paragraph 28. They could do so at their own discretion but if not pursue appeals for each tax year (no requirement for mandatory reconsideration before appeal in tax credits). You can argue that the appeal allows a new decision to be made on facts so DCE should be included.

If it is anything other than highest rate care, this could then lead to a revision of the transitional element to reflect the difference between lower rate disabled child element in CTC and UC.

Mark

Thank you Mark that is really helpful .  Need to read and absorb it butI will have a go for the last two years at least.

Hi Mark
How would you go about making such a challenge? Should it be a written revision request in the first instance?
Many thanks

HI Adviser

Yes, one option is a written request for a revision - can use form WTC/AP.

However, there is an option to go straight to appeal for tax credits decisions (no requirement for mandatory reconsideration) using form SSCS5.

It is necessary to identify the decision and tax years to revise/appeal and make separate requests for each tax year if needed.

Remember to lodge a new revision/appeal against a new in-year final decision if move onto UC.

If it is now more than 13 months since the decision you hope to get changed, i.e. a final decision for 2022/23 or earlier, then this could be a request for HMRC to use its discretion to use TCA s20 ‘discovery’ power to revise in claimant’s favour, or a complaint/request for ex-gratia payment.

Mark

Hi Mark

Thanks for your response. The client’s child was awarded PIP in September 2023 and he claimed UC under managed migration this month. The child was no longer a QYP at the time of the UC claim and cl was no longer in receipt of CTC so transitional protection doesn’t come into play. So it would be the tax years 23-24 and 24-25.
I need to identify the decisions in question and make two separate appeals? The client doesn’t have tax credits awards letters any more.

Yes, there are two separate decisions, the final decision for each tax year, so technically two separate appeals, which should be heard together.
Mark

Will we need to establish the dates of the two final decisions from Tax Credits before appealing?

If you go for a review, s21A of TCA requires “a written application to do so that identifies the applicant and decision in question” - stating"the final decision for 2023/24” should be sufficient for HMRC to identify the decision even without the date.
If you go straight to appeal, the FTT Rule 22(4) requires a copy of the decision, but this can be waived by the tribunal clerk under Rule 7(2).

Thanks so much Mark