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HMRC internal manual

Tax Credits Manual

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HM Revenue & Customs
Updated
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Appeals stages: Appeals stage 3 - settlement by agreement

Checklist

Before you follow this guidance make sure

  • you follow the guidance in TCM0138020 
  • you have the correct user roles to follow this guidance
  • you have access to the Appeals database.

Background

An appeal may be settled by agreement.

Settlement by agreement is where the customer and Tax Credit Office (TCO) reach an agreement about the terms of the disputed decision. For tax credits, settlement will be considered whenever the customer appeals against a decision.

  • if there is a full settlement, the appeal will effectively close
  • a partial settlement is where a number of issues are raised but the appellant agrees they no longer wish to pursue some of those issues. If HMRC and the appellant are able to agree on the remaining issues, the appeal will effectively close
  • if there is no settlement, and it will not always be possible to reach agreement, the appeal will continue to the Tribunal
  • no partial settlement can be agreed where HMRC and the appellant are able to agree on only some of the issues raised by the appeal. In this case the whole of the appeal will continue to the Tribunal. HMRC’s written submission on the appeal should explain which areas the department and the appellant now agree on. The Tribunal may incorporate some or all of that agreement into its final determination of the appeal having taken into account HMRC and the customer’s evidence and information.

This process is started where the issues raised by the customer in the letter of appeal are discussed, preferably over the phone.

If there is merit in what the customer is saying, then you can amend the decision accordingly and the appeal is settled by agreement.

Alternatively, there may be no merit in what the customer is saying. However, once the decision or the operation of the legislation behind the decision or some other aspect has been explained, the customer may agree that the appeal is not appropriate after all.

To effect a settlement by agreement there must be an agreement on the issues between HMRC and the customer.

A settlement cannot be imposed or assumed because HMRC is able to change only part of it in favour of the customer when compared with the grounds of appeal. If HMRC is able to change the decision to meet all the grounds of appeal then settlement can be assumed.

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Guidance

Note: When sending customer, staff or process data to another individual or team, make sure you follow the latest data security guidelines or contact the Data Guardian or Data Security Team for advice.

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Step 1

Identify what you are dealing with.

If you are dealing with a new settlement case, go to Step 2.

If you are dealing with a returned form TC621, go to Step 6.

If the BF date for form TC621 has expired, go to Step 16.

If you have received a letter from the customer withdrawing from a settlement agreement, go to Step 16.

If the BF date for a form TC622 has expired, go to Step 17.

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Step 2

Check the form WTC/AP or the Appeal letter and identify the reason why the customer is appealing

  • check if the decision they are appealing against is correct. To do this obtain all relevant evidence by checking some or all of the following
    • the tax credits computer. For how to do this, use TCM1000012 
    • the case papers. For how to retrieve case papers, use TCM0074060 
    • compliance case papers
    • Contact Management Application (CMA)
    • the Access to DWP Data (ADD) system. For how to do this, use TCM1000014 
    • the Child Benefit On Line (CBOL) system
    • retrieval of phone call recordings
    • Tax Credit Technical Manual
    • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
    • Claimant Compliance Management Information System (CCMIS)
    • Healthcheck, Enabling, Aftercare, Leverage (HEAL)
    • Tax Credit Workbench (TCW)
    • Knowledge and Analysis (KAI).
      Note: This list is not exhaustive.
      Note: If you do not have access to check one of the items listed in the bulleted lists, ask a case worker to make the check for you.

Check if the appeal is against a considered decision.

Note: A considered decision is when the decision was made based on documentary evidence to determine entitlement for example the Credit Reference Agency (CRA) enquiries, child care enquiries, child responsibility decisions. Further guidance that will help you determine if a decision is a considered decision can be found at TCTM09460 and TCTM09470.

If the decision was a considered decision, go to Step 3.

If the decision was not a considered decision, go to Step 6.

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Step 3

Check if the documentary evidence is sufficient to defend the decision. For how to do this, use TCTM09460 and TCTM09470.

If the documentary evidence is not sufficient to defend the decision, go to Step 4.

If the documentary evidence is sufficient to defend the decision, go to Step 7.

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Step 4

Check whether the decision can be overturned.

Note: Your Front Line Manager (FLM) might need to be consulted for their agreement, if the evidence to overturn is uncertain.

Note: Consider if you can legally make the change under Section 54 of the Taxes Management Act.

If the decision can be overturned

  • update the NTC system
  • complete the appropriate coloured coversheet, following local procedures
  • complete lessons learnt template following local procedures
  • update Household Notes with the message AS21 from TCM0156020, for how to do this use TCM1000001
  • lift the appeal marker, for how to do this use TCM1000453 
  • update the Appeals database, following local procedures
  • send a TC622 letter to the customer or authorised representative
  • go to Step 5.

If the decision can not be overturned, go to Step 6.

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Step 5

Check Household Notes for message UA61 or UA87 to see whether Compliance have made a referral to the National Workflow regarding penalties.

If compliance have made a referral regarding penalties

  • inform the Penalty team that the decision has been overturned on appeal
  • update Household Notes with message AS22 from TCM0156020, for how to do this use TCM1000001
  • send the appeal to remote storage, for how to this use TCM0074140 
  • take no further action.

If compliance have not made a referral regarding penalties, take no further action.

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Step 6

Follow the relevant guidance relating to the information you still need to check to decide if the decision is correct.

Note: You will need to return to this step and continue to follow this guidance once you have followed the relevant link below.

  • for appeals relating to child care charges establish if the decision is correct, for how to do this use guidance in TCM0032160 
  • for appeals relating to full time non advanced education (FTNAE), establish if the decision is correct, for how to do this use TCM0034040 and TCM0034080 
  • for appeals relating to Child responsibility (disputes over main responsibility), establish if the decision is correct, for how to do this use TCM0032100 
  • for appeals relating to Child not matched (pre award) establish if the decision is correct, for how to do this use TCM0078220 
  • for appeals concerning change of circumstances, entitlement or eligibility not already identified above establish if the decision is correct, for how to do this use TCM0114000 
  • for appeals related to work establish if the decision is correct, for how to do this use TCM0048020 
  • for Statement of Accounts (SOAs) establish if the decision is correct, for how to do this use TCM0012220 
  • for appeals related to income establish if the decision is correct, for how to do this use TCM0116020 
  • for appeals related to foster carers income establish if the decision is correct, for how to do this use TCM0124100 and TCM0094050 
  • for appeals related to renewal terminations (soft terminations) establish if the decision is correct, for how to do this use TCM0012180 
  • for appeals related to household breakdowns establish if the decision is correct, for how to do this use TCM0036100
  • for appeals related to right to reside or residency establish if the decision is correct, for how to do this use TCM0307100 and TCM1000211
    Note: Additional help on deciding if a customer meets the right to reside test can be found by accessing the decision trees in SEES.
    Note: For how to check the workers registration scheme or the home office database use the guidance in TCM1000211.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • for appeals related to cross border workers refer the case to the International team for them to establish if the decision is correct, for how to do this use TCM1000211 
  • for appeals related to migrant workers refer the case to the International team for them to establish if the decision is correct, for how to do this use TCM1000211 
  • for appeals related to crown servants or workers posted overseas refer the case to the International team to establish if the decision is correct, for how to do this use TCM1000211
    Note: Further information relating to right to reside, migrant workers, cross border workers and crown servants or workers posted overseas is available by following the guidance in CCM2000 and TCTM02000.
    Note: This list is not exhaustive. Refer to your TALLO if information relating to the appeal cannot be found in the Tax Credit Manual.
  • go to Step 7.

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Step 7

Phone the customer or authorised representative to discuss the issues raised in the appeal, for how to do this use TCM0094080.

Note: Make three attempts to call the customer or authorised representative at various times during the day to maximise the opportunity to contact the customer or authorised representative. Ensure that your last attempt is made before the final post collection of the day to enable you to write to the customer or authorised representative if the call is unsuccessful. If you started to work the case after lunch, make your third attempt on the following day but before the last post collection.

Note: If the customer or authorised representative has expressed concerns relating to domestic violence care must be taken to ensure that personal details are not divulged to any third party involved (the other parent, guardian of a child).

If the decision is correct and settlement can be made by agreement

  • tell the customer or authorised representative the appeal will not go to the Tribunal
    Note: If the customer changes their mind within 30 days, the appeal would go to the Tribunal.
  • go to Step 10.

If settlement by agreement cannot be made, go to Step 16.

If the decision is not correct, go to Step 8.

If new information is provided by the customer or authorised representative that requires further investigation

Note: It should be explained to the customer or authorised representative that any documentary evidence should be sent in within 21 days with a covering letter.

If you are not able to contact the customer or authorised representative by phone, go to Step 9.

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Step 8

Check whether the decision can be overturned.

Note: Your FLM might need to be consulted for their agreement, if the evidence to overturn is uncertain.

Note: Consider if you can legally make the change under Section 54 of the Taxes Management Act.

If the decision can be overturned

  • update the NTC system
  • complete the appropriate coloured coversheet, following local procedures
  • update Household Note with the message AS21 from TCM0156020, for how to do this, use TCM1000001 
  • complete lessons learned, following local procedures
  • lift appeal marker, for how to do this use TCM1000453 
  • update the Appeals database following local procedures
  • send a TC622 letter to the customer or authorised representative
  • go to Step 5.

If the decision can not be overturned, go to Step 6.

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Step 9

Send a letter to the customer and update NTC

  • send TC621 or TC621 Triage letter to the customer or authorised representative
  • update Household Notes with the message AS17 from TCM0156020, for how to do this use TCM1000001 
  • file the appeal in the clerical BF for 21 days
  • take no further action.

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Step 10

Check if changes need to be made to the customer’s entitlement.

If changes need to be made to the entitlement, go to Step 11.

If changes do not need to be made to the entitlement, go to Step 12.

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Step 11

Check the status of the claim, for how to do this use TCM1000025.

If the claim has been awarded

  • tell the customer they will receive an award notice setting out their award entitlement
  • remove the appeal marker prior to making any changes to the system, for how to do this use TCM1000453 
  • follow the relevant changes guidance and amend the details held on the tax credits computer, for how to do this use TCM0030000 
  • go to Step 12.

If the claim has been disallowed

  • amend the details held on the tax credit computer, for how to do this use TCM0070140 
  • go to Step 12.

Note: For EEA appeals you will need to contact the International team and arrange for any corrective action or further investigation to be taken, for how to do this, use TCM1000211.

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Step 12

Send letter to the customer or authorised representative and update relevant systems

  • send a TC622 letter to the customer or authorised representative
  • complete the appropriate coloured coversheet, following local procedures
  • remove the appeal marker, for how to do this use TCM1000453 
  • update the Appeal database following local procedures
  • update Household Notes with the message AS03 from TCM0156020, for how to do this use TCM1000001 
  • close the appeal, for how to do this use TCM1000453 
  • go to Step 13.

Note: If the customer changes their mind and decides not to settle the appeal by agreement, they must withdraw from the agreement in writing within 30 days of the TC622 being issued.

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Step 13

Check if the claim is on the Unfinalised S17 work list or the Unprocessed S17 work list, for how to do this use TCM1000142 

  • make a note of any work list items, for how to do this use TCM1000142.

If there is not an Unfinalised S17 work list item or an Unprocessed S17 work list item

  • file the appeal in clerical BF for 30 days
  • send the appeal to remote storage, for how to do this use TCM0074140 
  • take no further action.

If there is an Unfinalised S17 work list item or an Unprocessed S17 work list item

  • make a note of the six-digit Management Unit
  • go into AMBS Maintainer
  • go to Step 14.

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Step 14

From your notes, check the reason of any work list items.

If the work item shows the reason APP

  • go out of AMBS Maintainer
  • go into AMBS Appeals Officer
  • go to Step 15.

If the work item does not show the reason APP

  • file the appeal in the clerical BF for 30 days
  • take no further action.

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Step 15

Finalise the claim or where appropriate finalise and renew, for how to do this use TCM1000448 

  • check that all the details of the year of claim, are correct before the claim is finalised
  • update Household Notes with the message SG30 from TCM0172040, for how to do this use TCM1000001
  • complete the appropriate coloured coversheet, following local procedures
  • file the appeal in the clerical BF for 30 days
  • take no further action.

Note: For EEA appeals you will need to contact the International team to arrange for the claim to be finalised and renewed, for how to do this use TCM1000211.

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Step 16

Send the customer’s appeal to be sent to the Tribunal

  • complete the appropriate coloured coversheet, following local procedures
  • send a TC636 letter to notify the customer or authorised representative that their appeal will be sent to the Tribunal
  • send the appeal to the Response Writer
    Note: The Response Writer will refer the case to the Tribunal Service.
  • update Household Notes with the message AS19 from TCM0156020, for how to do this use TCM1000001 
  • take no further action.

Note: If you are dealing with an EEA appeal you will need to arrange for all paperwork to be returned from the International team, for how to do this use TCM1000211.

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Step 17

Check if the claim is compliance related, for how to do this use TCM0134440.

If the appeal is not compliance related 

  • send the appeal to remote storage, for how to this use TCM0074140 
  • take no further action.

If the appeal is compliance related

  • complete form MS164
  • file in local storage
  • take no further action.