CCM11370 - End of Year Issues: Adjustment needed but no penalty - making a S18 decision

In these cases your examination will have established that the initial claim was incorrect or they had failed to notify a notifiable change of circumstances but you will not be seeking a penalty. Although the initial claim was incorrect there may also be later adjustments to take into account based on the S17 notice.

For example, the initial examination for 2003/2004 was made because you suspected one of the children was not living with the claimant. In April 2004 the claimant admits the child was not living with them at 6 April 2003 and had not lived with them throughout the year. In addition, their household income for 2003/2004 increased by £7,000 because their partner changed from part- time to full-time working in June 2003.

In these cases at the closure stage you need to:

• Seek a certificate of full disclosure - see CCM8120.
• Consider the interest position – see CCM8122.
• Inform the claimant of your conclusions - see letter below.
• Remove the inhibition on NTC, using function Manage Finalisation, and make the S18 decision. Remember that you will need details of the claimant’s actual (or estimated actual, if appropriate) income for the year before you can finalise the entitlement. So if they have not sent in a response to the S17 notice you must obtain the actual income figure as part of your examination. If the claimant(s) supplies an estimated income figure at this stage, your S18 decision will be an interim one, and you should remind the claimant(s) that they will have to supply the final figure by 31/1 of the following year.
• Note TCW and office records - see CCM8190.

Any overpayment or underpayment will be handled automatically by the NTC system so you do not need to take any action regarding recovering any overpaid credits. However, if you are aware there is likely to be an overpayment you should advise the claimant of this as soon as possible so that the decision notice does not come as a surprise.

The text for your closure letter is as follows:

"I have examined your claim to tax credit for [2003/04] and have concluded that you [were not entitled to tax credit] [were entitled to tax credit at the rate of £XXXX.XX] for [2003/04]. You will shortly receive a formal notification of my decision, against which you will have the right of appeal.

[I have decided that you are not entitled to tax credits for [2004/05].] [I have also made a provisional decision on your award of tax credits for [2004/05]. Please note that this does not mean that I have examined, and am satisfied with, your claim for [2004/05]. If I need to ask you for any information relating to your claim for [2004/05] I will write to you again.]

I would like to remind you of the importance of reporting accurate information on your claims for tax credits and let the Tax Credit Office know of any changes in your circumstances. Failure to do so may lead to you being charged a penalty.

[I have sent a copy of this letter to [name of partner].]

[ May I take this opportunity to thank you for your co-operation which has helped me bring my examination to an end.]"

You should only include the final paragraph if the claimant has given good co-operation.

Where interest is to be charged you should add the following paragraph:

“You will be charged interest from [date]. If you disagree with the decision to charge interest you may appeal. If you wish to appeal please let me have your reasons in writing, within 30 days of the date of this letter.”