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HMRC internal manual

Claimant Compliance Manual

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HM Revenue & Customs
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Undisclosed Partners: Recovery of Overpayments from 18 January 2010 - Examples

The following examples show how to calculate notional entitlement to arrive at the amount of the overpayment that you can remit. You must remember

  • You cannot make your calculation until an award has been made on the new, correct claim
  • You must make separate notional entitlement calculations for each tax year involved
  • You must not include the period for which the new claim was backdated in your calculation
  • Notional entitlement is only calculated for the years for which you have revised an award. If you have decided not to go back to an earlier year you do not include the earlier year(s) in your calculations.
  • Notional entitlement cannot exceed the amount of the overpayment for each tax year for the old award.

Example 1

Anna was awarded tax credits as a single mother from 16 April 2009. On 20 January 2010 Anna admits she failed to tell HMRC that Jim moved in with her on 15 August 2009. Anna and Jim make a new joint claim and it is backdated to 28 October 2009. Anna’s overpayment for 15 August 2009 to 20 January 2010 is £4,759.

Anna and Jim have made a new claim so you can calculate notional entitlement for the period 15 August 2009 to 27 October 2009. Had they made a correct claim they would have received £1,210.

The notional entitlement for 2009/2010 is £1,210 so you will remit that amount and we will recover £3,549 from Anna.

Example 2

Ellie was awarded tax credits as a single mother from 27 June 2008. On 1 February 2010 Ellie admits that her claim was incorrect as she had been living with Mike since the spring of 2008. Ellie and Mike make a new claim for 2009/2010 and this is backdated to 5 November 2009. Ellie has two overpayments as follows:

2008/2009 (27 June 2008 to 5 April 2009) £5,900

2009/2010 (6 April 2009 to 1 February 2010) £6,350

Ellie and Mike have made a new claim so you need to calculate notional entitlement for two periods. Had they made claims they would have received

2008/2009 (27 June 2008 to 5 April 2009) £1,100

2009/2010 (6 April 2009 to 4 November 2009) £850

The notional entitlement for 2008/2009 is £1,100 and for 2009/2010 it is £850 so you will remit these amounts. We will recover £4,800 for 2008/2009 and £5,500 for 2009/2010 from Ellie.

Example 3

Dionne and Zag made a joint claim in 2006. On 5 February 2010 during an intervention regarding child care costs Dionne admits Zag left her on 1 October 2009. Dionne makes a new single claim which is backdated to 17 November 2009. The overpayment for Dionne and Zag for 1 October 2009 to 5 February 2010 is £200.

Dionne makes a new claim so you can consider notional entitlement for the period 1 October 2009 to 16 November 2009. Had Dionne made a correct claim she would have received £470.

The notional entitlement for 2009/2010 is £470 but as this exceeds the overpayment you will restrict the notional entitlement to £200 and remit the full overpayment.