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HMRC internal manual

Enquiry Manual

Working the enquiry: Consider your enquiry’s impact on tax credits and child benefit

If you are making an enquiry into a taxpayer’s tax return, you must consider whether your findings will have any impact on the amount of any tax credits or child benefit they may be entitled to claim.

To help you identify relevant cases the standard intelligence package (SIP) should contain the following information

  • The amount of income used by Benefits and Credits (B&C) to calculate the tax credit award.
  • The level of the tax credit award that has been set.
  • The amount of income reported to B&C by the claimant.
  • Whether the award included child benefit, child tax credit, working tax credit or both.

The amount of tax credits that individuals are entitled to claim will be affected by changes to the level of income shown on the return. This includes any changes to

  • the level of business profits or losses, including business-related rental income or income from property
  • a director’s income, including remuneration, shares and dividends
  • an employee’s earnings, including tips, gratuities, bonus, commission and benefits in kind
  • other income, including interest on savings, investments on dividends, income from property, trust income, foreign income, occupational, state or personal pensions
  • a taxpayer’s employment status.

When the outcome of your enquiry has an impact on tax credits or benefits

When you identify that income has been under-declared, you should explain to the taxpayer that this may affect the level of any tax credits that they have been awarded.

You do not need to work your enquiry jointly with B&C or to obtain their consent before you close an enquiry.

But when you have completed your enquiry you must

  • calculate the amount by which the level of income shown on the return has changed, and
  • make a report to B&C using the ‘SA Profit Referral’ form in SEES xmls forms (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Note: The way you access xmls forms is different to other SEES forms. To access the form select the ‘xmls forms’ option rather than the ‘Forms and Letters’ option from the drop down menu. Then select the ‘National’ tab from the options in the top left hand corner. The next step is to open the ‘Tax Credit and Child Benefit Compliance’ sub-folder by selecting the small + sign next to the folder. You can find the ‘SA Profit Referral’ form within the folder.