CCM8050 - Closing the Examination

Other factors with a bearing on the amount of the overpayment

Before you bring your examination to a conclusion you should consider any other factors which may have a bearing on the amount of tax credits overpaid. For example, you may be about to terminate the award because it was made by:

• a single claimant who was in fact a member of a couple at the time they made the claim
• a single claimant who subsequently failed to notify that a partner had moved in to the household
• a couple who failed to notify that they split up during the year.

In all these circumstances, the new household unit may be entitled to make a claim for tax credits. If you consider that the individual or couple could make a new claim, you should advise them that subject to the new household’s level of income they may be able to receive further tax credits.

Where there has been a change in the household, and that change was not notified in time, the claimant(s) may be time barred from claiming tax credits for the whole of the year. This is because a claim can only be backdated for a maximum of 3 months.

Example 1

Janice claims tax credits for 2003/4 on 6/2/2003. An examination is opened on 17/7/2003, and Janice admits that she has been living with Clive since 1999. The award is terminated (w.e.f. 6/4/2003) on 15/9/2003, and tax credits overpaid are recovered, along with interest and a penalty (for an incorrect claim), by contract settlement (tax credits are recoverable in-year, and interest is chargeable, because there was never any entitlement to tax credits).

The CCO advises Janice and Clive that they may, subject to the amount of their joint income, be able to make a joint claim for tax credits for 2003/4. Janice and Clive make a claim for 2003/4 on 1/10/2003. Although they would have been able to claim from 6/4/2003 if they had made a joint claim within time, the claim made on 1/10/2003 can only be backdated to 1/7/2003. No tax credits are due for the period 6/4/2003 - 30/6/2003.

Example 2

Mary claims tax credits for 2003/4 on 10/3/2003. On 30/6/2003 Patrick moves in with her, but she does not contact us to notify the change. An examination is opened on 12/12/2003, and Mary admits that she has been living with Patrick since June. The award is terminated (w.e.f. 30/6/2003) on 14/2/2004. The tax credits cannot be recovered in-year (as there was initially entitlement), and no interest is chargeable for the same reason. A penalty-only (for failure to notify a CoC) contract is obtained. The CCO advises Mary and Patrick that they may, subject to the amount of their joint income, be able to make a joint claim for tax credits for 2003/4. Mary and Patrick make a claim for 2003/4 on 1/3/2004. The claim can only be backdated to 1/12/2003, so that no tax credits are due for the period 1/7/2003 - 30/11/2003.

You should not be drawn into giving advice to claimants on whether their income will be low enough to allow them to receive payments of tax credits, or on how much they might expect to receive. If asked, you should tell claimants generally about eligibility rules related to their personal circumstances but if they want a detailed calculation of their likely award you should refer them to either the Tax Credits Helpline or the Internet's Do I Qualify calculation tool. You should not take any account in your settlement of any notional amounts of tax credit that you think the claimant(s) might be entitled to if they make a valid claim. You should base your conclusions solely on the entitlement up to the date from which the award is terminated.