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HMRC internal manual

Tax Credits Manual

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HM Revenue & Customs
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Changes - miscellaneous (G-Z): PY-2 or earlier changes manual calculation

Background

The 5 Hats (^^^^^) recalculation message is no longer available to recalculate an award which is PY-2 or earlier. This means the NTC system can no longer re-profile the award (which would normally include setting off underpayments against overpayments) for the years concerned.

To determine entitlement for the period concerned a manual calculation will be required and then a comparison needs to be made to determine if any calculated underpayments should be set off against any outstanding overpayments. If the customer is still due money a non-postable manual payable order or cash cheque need to be issued.

Checklist

Before you follow this guidance, you must make sure

  • you follow the guidance in TCM0138020 
  • you have the correct user roles to follow this guidance. Use the B&C Roles and Access Catalogue. You can find this by going to the Benefits & Credits homepage, selecting ‘R’ on the B&C A-Z index, selecting ‘Roles and Access Process’, selecting ‘Roles & Access Catalogue’ from the Related links menu
  • the oldest year is worked first.

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/Data Security Team for advice.

Step 1

If you have identified that a change can be made and you were told at Step 15 of TCM0044160 to come to this guidance, go to .

If you have not identified if the change can be made, follow the guidance in TCM0042260.

If you are dealing with an appeal, follow the guidance in TCM0044160 at Step 8, then return to this guidance if you are directed to.

Step 2

From the Shared Expertise to Exploit Software (SEES) calculation you made at Step 8 of TCM0044160, compare the entitlement, calculate and make a note of the underpayment for CTC and WTC for the relevant PY-2 or earlier year on form TC648

Note: To calculate this from the SEES entitlement, subtract the entitlement shown in function ‘Household View Accounts’. For how to do this. use TCM1000486.

then

  • go to .

Step 3

Check to see if there are any outstanding overpayments for the PY-2 or earlier years (including the year in which the underpayment applies). For how to do this, use TCM1000386.

If there is an overpayment on an earlier year

  • make a note of the overpayment amounts for CTC and WTC for each of the earlier years on form TC648

then

  • go to .

If there is no overpayment on the earlier year, go to .

Step 4

Check if there is an overpayment recovery suspension marker on the claim. For how to do this, use TCM1000117.

If any suspension checkboxes have been selected

  • lift the suspension. For how to do this, use TCM1000112 

then

  • go to .

If no suspension checkboxes have been selected, go to .

Step 5

Compare the underpayment amount you noted at to the overpayment amount you noted at , then, starting with the year the change relates to

  • remit the amount of overpayment for CTC and WTC, up to the value of the underpayment, follow the guidance in TCM0230060. Use code 5B

Note: By remitting the overpayment from the calculation made earlier in this step, you will be reducing or clearing the debt.

  • record the remission on the remittance template sheet using code 5B
  • if the underpayment was more than the outstanding overpayment then repeat this step for earlier years, or any later year up to and including PY-2 with an outstanding overpayment until the underpayment is either used up or there are no outstanding overpayments (start with the with the earliest year that has an overpayment first).

then

  • follow the guidance at TCM0220090 to consider if any other overpayments are outstanding and could be reduced with the customers consent
  • go to .

Step 6

If there is an underpayment still outstanding, go to .

If there is no outstanding underpayment, go to .

Step 7

Use Function View Application and check if the customer has a valid bank account.

Note: if the claim is ceased or terminated contact the customer to confirm the bank details. For how to do this, follow the guidance in TCM0094080.

If the customer has a valid bank account

  • access the SEES ‘Forms and Letters’ to complete and send a Manual Payment Referral form. Under ‘Payment Details’

    • select ‘BACS payment’ for the ‘Payment method’
    • enter ‘recalculation of an award which is PY-2 or earlier (TCM0044170)’ for the ‘reason for the manual payment’
    • select ‘Not to be posted’
    • select ‘Yes’ for ‘Is there a one-off arrears payment due?’

Note: This needs to be done for each year up to 06-04-2011.

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.

  • go to .

If the customer does not have a valid bank account

  • access the SEES ‘Forms and Letters’ and to complete and send a Manual Payment Referral form. Under ‘Payment Details’

    • select ‘Payable Order’ for the ‘Payment method’
    • enter ‘re-calculation of an award which is PY-2 or earlier (TCM0044170)’ for the ‘reason for the manual payment’
    • select ‘Not to be posted’
    • select ‘Yes’ for ‘Is there a one-off arrears payment due?’

Note: This needs to be done for each year up to 06-04-2011.

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.

  • go to .

Step 8

If the change can be applied to any other PY-2 or earlier year 

  • follow the guidance in TCM0044160 at Step 8 to repeat the process for those other years

then

If you have worked PY-2 and all relevant earlier years and you need to make changes to PY-1 or later years, return to TCM0044160 at Step 15

If you have worked PY-2 and all relevant earlier years and do not need to make changes to PY-1 or later years

* update Household Notes with the appropriate messages, either NZ21, NZ22 or NZ23 from [TCM0164040](https://www.gov.uk/hmrc-internal-manuals/tax-credits-manual/tcm0164040). For how to do this, use [TCM1000001](https://www.gov.uk/hmrc-internal-manuals/tax-credits-manual/tcm1000001) 

then  


* go to .

Step 9

Complete TC602 manual award notice for each of the years up to PY-2 where you can apply a change

Note: you need to use information from the SEES calculation and not the NTC system when completing the TC602 manual award notice

then

  • go to .

Step 10

If you have no further action to take 

  • send any correspondence to storage. Follow the guidance in TCM0074140.

If you have any further action to take 

  • complete it then send any correspondence to storage. Follow the guidance in TCM0074140.