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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 - Claim is incorrect from the outset - Examples with a penalty

Example 1

Angie made her first tax credit claim in 2007 when she went back to work following the birth of her son. Angie was awarded tax credits from 15 October 2007. On 15 February 2010, following an enquiry for 2008/2009, Angie accepted she had been living with Jack since the date of the first claim. Angie had made a single claim because Jack spent every weekend with his ex-wife and children. Angie thought that as he only spent 4 nights with her all the household bills were in her name they were not a couple for tax credit purposes. You decide to impose a penalty.

Angie accepts she has made incorrect claims but in view of her means position you decide not to go back to 2007/2008. Angie and Jack make a new joint claim for 2009/2010 and this is backdated to 27 November 2009. Angie has two overpayments as follows

2008/2009 (6 April 2008 to 5 April 2009) £5,710

2009/2010 (6 April 2009 to 15 February 2010) £4,200

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

2008/2009 (6 April 2008 to 5 April 2009) £1,845

2009/2010 (6 April 2009 to 26 November 2009) £1,150

The notional entitlement for 2008/2009 is £1,845 and for 2009/2010 it is £1,150. We will recover £3,865 for 2008/2009 and £3,050 for 2009/2010 from Angie. The 2008/2009 penalty will be based on a net over-claim of £3865.

Example 2

Julie claimed tax credits as a single mother from 1 July 2008 when she came back to the UK after 4 years spent in Spain. On 17 February 2010, following a 2008/2009 enquiry, Julie accepted she had been living with Liz as a couple since 1 July 2002. Julie said she had not realised same-sex couples needed to make a joint claim as before she left the UK she had been required to make a single claim. Julie claims not to have realised the legislation had changed but you point out this is now clearly covered on the claim form and decide to charge a penalty.

Julie accepts she has made incorrect claims. Julie and Liz make a new joint claim for 2009/2010 and this is backdated to 1 December 2009. Julie has two overpayments as follows

2008/2009 (1 July 2008 to 5 April 2009) £4,120

2009/2010 (6 April 2009 to 17 February 2010 £5,090

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

2008/2009 (1 July 2008 to 5 April 2009) £400

2009/2010 (6 April 2009 to 30 November 2009) £390

The notional entitlement for 2008/2009 is £400 and for 2009/2010 it is £390. We will recover £3,720 for 2008/2009 and £4,700 for 2009/2010 from Julie. The 2008/2009 penalty will be based on a net over-claim of £3720.