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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: miscellaneous charges: overpaid Child Trust Fund contributions

 

Background

The Child Trust Fund (CTF) is part of the Government’s strategy to encourage savings and investment for children. Generally all children born on or after 1st September 2002 will receive an initial contribution from the CTF.

Providing entitlement conditions are satisfied further contributions may be paid at a later date. The contribution should be invested by the parent on behalf of the child and for this purpose some financial institutions (financial providers) have been approved to provide CTF accounts.

Overpaid contributions

Where it is discovered that a contribution should not have been paid (for example, because of non-entitlement) the Child Trust Fund Office (CTFO) will prepare and issue a charge for the overpaid contribution. It is not expected that many of these charges will be issued.

All charges will be issued in the original amount of the contribution made.

If the financial provider holds the funds at the date the overpayment is established, the charge will be raised on the financial provider.

If the funds have been released to the child or child’s representative (the ‘person responsible’), the charge will be raised on that individual.

The sum to be repaid will be the value of all government contribution(s) plus income/gains arising on those contributions. It should also be noted that there is no guarantee that the CTF will appreciate in value and that there is the potential for a shortfall.

Appeals/objections

There is a statutory right of appeal against the decision giving rise to an overpayment which must be made in writing.

Any appeal, objection to the amount or any other query you are unable to resolve, should be referred immediately

for charges on Financial Providers

for the attention of(This content has been withheld because of exemptions in the Freedom of Information Act 2000) using form CTF56.(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

for charges on ‘the person responsible’

for the attention of (This content has been withheld because of exemptions in the Freedom of Information Act 2000) using the specified template.

Miscellaneous Charges Unit procedures

Overpaid CTF contributions are dealt with by the Miscellaneous Charges Unit at Shipley.

Notification of charge

CTF overpayments will be notified on forms CTF53 and will indicate prominently if the charge has been raised on a ‘financial provider’ or ‘person responsible’. The reference will be in the format

  • head of duty
  • charge consecutive number
  • Account.

For example, CTF/002/05.

Action on receipt of charge

On receipt

  • record the charge in Book 1, and
  • follow up any break in consecutive numbers with CTFO.

Due date for payment

Payment is due 30 days from the date the CTF53 is issued.

Interest

Interest is not chargeable on late payment of CTF charges.

Action on receipt of payment

If a payment is received in excess of the charge

  • post the excess in Book 19
  • issue form CTF55 to advise the amount received (indicating the amount received in the ‘Additional information’ box)
  • await form CTF57 (charge increase) from CTFO
  • clear the Book 19 entry.

If the payment received is less than the charge

  • post the payment
  • issue the specified template to CTFO noting the amount paid in the ‘Additional information’ box
  • await a charge amendment (form CTF57) or other advice from CTFO.

Accounting for payments received

Payments should be accounted for using CAROL. Details should be input as part of the daily lodgement to the “CTF OP” field on the New Tax Credits page.

Application for payment

The action to take on receipt of form CTF53 will depend on whether the charge has been raised on a financial provider or an individual (‘person responsible’).

Financial provider

Where the charge has been raised on a financial provider

  • issue LFC letter NETCTF 01 - 30 days after the date of issue of the Regulation 22(4) notice as shown on the CTF53
  • B/F 14 days
  • issue LFC letter NETCTF 02
  • B/F 10 days.

If the charge remains unpaid,

  • refer the case to (This content has been withheld because of exemptions in the Freedom of Information Act 2000) of RP CS SPSS, St John’s House, Merton Road, Bootle, Merseyside, L69 9BB - (This content has been withheld because of exemptions in the Freedom of Information Act 2000) , using the form CTF56. RP CS SPSS will provide advice about the action you should take
  • do not refer financial provider overpayments for local action. Note: You should only refer unpaid overpayments for an individual (‘person responsible”) on local action.

Individual (‘person responsible’)

Where the charge has been raised on an individual (‘person responsible’)

  • issue form DN2X(NUC) - 30 days after the date of issue of the Regulation 22(4) notice as shown on the CTF53
  • B/F 14 days
  • issue form DN3X(NUC)
  • B/F 10 days
  • refer the case to the appropriate Debt Management Technical Office on a local action notice. A new form has been introduced, C904(CTF).

Time to pay

Time to pay requests should be considered in the normal way.

Debt technical office procedures

General

Cases for enforcement will be sent on a clerical local action notice (C904(CTF)). A work item will not be created on IDMS.

You should only be involved in the recovery of overpayments from individuals.

Reference number

CTF charges will include the letters ‘CTF’ as part of the reference number.

Interest

Interest is not chargeable on late payment of CTF charges.

Time to pay

Time to pay requests should be considered in the normal way.

Enforcement - England, Wales and Northern Ireland

Child Trust Fund overpaid contributions can be enforced by any of the usual methods.

Please note they are not suitable for the County Court Bulk Centre.

If you need to take enforcement proceedings you should follow the guidance below when preparing your documentation.

County court proceedings

On form N1 show brief details of the claim as ‘Overpaid child trust fund contributions’.

Show the particulars of claim as ‘Overpayment of child trust fund contributions recoverable under regulation 22(4) of the Child Trust Funds Regulations 2004’.

Summary proceedings (England, Wales and Northern Ireland only), distraint and summary warrant

Describe the debt as for particulars of claim above.

In Scotland, ordinary cause and summary proceedings

Follow the styles contained in the disk of styles issued by Recovery Group Edinburgh.

Certificate of debt

If you need a certificate of debt use the example shown at DMBM615680.

You should send the form for certification (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

Recovery proceedings (RP) checks

Normal procedures apply for RP checks (DMBM615040).

Remissions

The normal remission criteria apply - see DMBM735020 - DMBM735090.

Where the conditions for remission/write off are met suggest the appropriate class of remission to the Miscellaneous Charges Unit with supporting reasons.

The Miscellaneous Charges Unit remit the tax on your recommendation.