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HMRC internal manual

Claimant Compliance Manual

Particular aspects: estimated income - advising customers of the impact of their payments and of the end of year reconciliation

When you discuss estimated income figures with customers, you should make sure they understand that they will be asked, after the end of the year, to confirm that the estimated figure was correct, or say what the amount should have been. You should also point out that we check the income figures on customers’ renewal forms against our own databases, so that we can identify and chase up any mismatches.

You should also point out that, from 6 April 2007 where they notify a reduced level of income, their award will be recalculated using their estimated current year income and their future payments will be adjusted, but they will not normally be paid the arrears as a lump sum. This is to provide a buffer against any debt if their estimate is too low. If, once they have confirmed their income for that year:

  • they have been underpaid they will then be paid the extra tax credits as arrears
  • they have been overpaid they will have to pay back the extra tax credits they have received.