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HMRC internal manual

Claimant Compliance Manual

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HM Revenue & Customs
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Closing the Examination: Recoveries

Settlement before 5 April

Where the examination is settled before 5 April an adjustment without a penalty will lead to one of the following outcomes:

  • On-going entitlement but in a different amount - see a. below
  • No entitlement for the period of claim - see b. below
  • Entitlement ceased during the year - see c. below
  • Claim made in the wrong capacity - see c. below
  • No entitlement to one of the elements of tax credits but ongoing entitlement to the other element - see d. below

a.  On-going entitlement. In these cases there will be no overpayment as a result of the examination. Any adjustment will be dealt with by adjusting the tax credits due for the remainder of the year. Any balance will be collected from future awards. Once you have amended the award there is no need to take any further action regarding the overpayment up to the date of the amendment and there will be no interest charge.

b.  No entitlement. In these cases there will be an overpayment which is recoverable in-year under S28(6). This will be recovered by direct payment and there is no further action for you to take regarding the overpayment once you have amended the award.

c.  Entitlement ceased during the year or claim made in the wrong capacity. In these cases there is no ongoing award but the overpayment is not legally recoverable until after the end of the year. The overpayment will be recovered by direct payment and there is no further action for you to take regarding the overpayment once you have amended the award.

d.  No entitlement to one of the elements. Where the claim was for both WTC and CTC but there is no entitlement to one of the elements the NTC system will try to recover the amount overpaid from the element still payable. Where there is an excess of the overpayment this can be recovered in-year - see CCM8125.

Settlement after 5 April

Where it is not possible to settle the examination during the year it must be settled following guidance in CCM11000. Where an overpayment is established for the year of examination you do not need to take any further action regarding the recovery. If there is on-going entitlement the overpayment will be recovered from the future award. In all other cases the customer will be asked to make a direct payment to repay the overpayment.

Settlement includes an earlier year

Where the examination established an impact for an earlier year you will either have opened an enquiry or made a discovery decision - see CCM8115. There will be an overpayment for the earlier year which will be recovered as follows:

  • Where there is a continuing award - the overpayment will be recovered from future payments
  • Where there is no continuing award - the customer will be asked to make a direct payment to Debt Management & Banking or the overpayment may be recovered via Cross Award Recovery if a subsequent claim from the customer is awarded