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HMRC internal manual

Claimant Compliance Manual

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HM Revenue & Customs
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Undisclosed Partners: Same-Sex Couples - Failure to Notify Change of Circumstance

Where a tax credit customer becomes a member of a same-sex couple they are required to notify the change of circumstances within 1 month of the date of the change. Before 6 April 2007 customers had 3 months to notify a change of circumstances. The single claim will be terminated from the date the customer became a member of a couple and they will be entitled to make a joint claim with their partner.

A failure to notify such a change means the customer is liable to a S32(3) penalty. CCM10140 provides details of such penalties. The customer may say they were not aware they had to notify such a change as they did not think we recognised same-sex couples. You and your manager will have to decide whether you think their explanation constitutes a reasonable excuse. You should bear in mind that a newsletter went to all customers in the Summer of 2005 explaining about the changes from 5 December 2005 and subsequent claim packs have referred to same-sex couples.

Special transitional legislation was introduced for same-sex couples who were already living together at 5 December 2005. Social Security case law provides that a change in the law does not constitute a change of circumstance. This would also have applied to tax credits and would have meant existing same-sex couples could not initially be brought into the new provisions. The transitional powers require customers to notify us that they are living together as a same-sex couple whether or not they are civil partners. The single claim will be terminated from 5 December 2005 and they will be entitled to make a joint claim with their partner.

The customer had 3 months from 5 December 2005 to notify that they are living as a same-sex couple. If they had not notified us by 5 March 2006 they are liable to S32(3) penalty. CCM10140 provides details of such penalties. However, in reality we are unlikely to impose S32(3) penalties for same-sex couples caught by the transitional legislation because of the very small gap between 5 March and the end of the 2005/2006 tax year. If the customer returns their S17 notice, to finalise 2005/2006, and fails to mention they are living as a same-sex couple they will then have made an incorrect claim and you can consider a S31(1)(a) penalty - see CCM15310.