Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
, see all updates

Payment - hardship (general): Hardship - clerical top-up after referral from DMB - TCO only (AG)

Background

Use this guidance if you’ve received a referral form TC871 from Debt Management and Banking (DMB) that recommends reduction of a customer’s recovery rate.

The claim will be undergoing cross-year recovery only (which may be as a result of Cross Award Recovery), so Function ADJUST IN YEAR PAYMENTS can’t be used.

You’ll therefore need to clerically calculate and administer clerical top-up payments to the customer to reduce the recovery.

You must complete a Clerical top up worksheet whilst working through this guidance.

Guidance

To deal with a clerical top up payment after a referral has been received back from Debt Management and Banking (DMB), consider steps 1 to 7.

Step 1

Establish if the payment you’re making is a BF payment or a new referral received from DMB.

  • If you have a new referral from DMB
    • link the referral form TC871 with the casepapers from the BF run, including the TCO - adjust in year payments pro-forma
    • open the Clerical top up worksheet (Excel 62KB) (referred to as ‘the worksheet’ in the remainder of this guidance) and copy the name, NINO, and start date of hardship claim information from the TCO - adjust in year payments pro-forma onto the worksheet
      then
    • go to Step 3.
  • If you have a BF payment to be made, go to Step 2.

Top of page

Step 2

Check for evidence of a new award version since the last regular BF payment was made.

Use Function VIEW APPLICATION to trace the latest claim on the computer. To do this

  • on the Function Menu, select ‘Application’ on the toolbar menu and select ‘View’ from the options available. You’ll be taken to the Key Entry Data screen
    • enter the customer’s NINO in the Key Entry Data screen
    • select the All checkbox
    • select [OK]. You’ll be taken to the Select Application Version screen
      Note: If you’re taken to the Select Application screen, select the latest claim and then select [OK].
    • on the Select Application Version screen, check the date in the Received Date column for the latest claim version

then

  • If the date in the Received Date column is after the issue date of the last BF payment, as recorded on the worksheet, manual payments must be re-calculated
  • select the latest claim version
  • select [OK] and then go to Step 5.
  • If the date in the Received Date column is before the issue date of the last manual payment, as recorded on the worksheet
  • select [Cancel]. You’ll be taken back to the Function Menu
  • to issue the next scheduled payment, go to Step 6.

Top of page

Step 3

In Function VIEW AWARD establish the end date of the award

  • on the Function Menu, select ‘Award’ on the toolbar menu and select ‘View’ from the options available. You’ll be taken to the Key Entry Data screen
    • enter the customer’s NINO
    • select the ‘latest’ checkbox
    • select [OK]
    • select [View Calculation]. You’ll be taken to the View Calculation screen
    • select [View Elements]
    • open the Clerical top-up worksheet and enter the latest date shown in the ‘Ent Per End’ column in the End date of Award period field of the worksheet
    • select [Cancel] four times to return to the Function Menu Screen
    • select ‘Household’ and ‘View Account’. The Key Entry Data screen will display
    • enter the customer’s NINO in the Key Entry Data screen
    • select the ‘latest’ checkbox
    • select the ‘Payment Schedule’ checkbox
    • select [OK] to go to the View Direct Payment Schedule screen
    • highlight the next payment marked ‘STILL TO BE PAID’ in the Payment Status column
    • make a note of the Due Date of this payment in the ‘Next Paydate’ field on the worksheet
    • choose any payment with an amount recovered shown against it
    • copy the amounts shown in the ‘Net Amount’ and the ‘Amount Recovered’ columns into the ‘Posting net amount’ and ‘Posting amount recovered’ fields on the worksheet. This will then populate the ’Current recovery rate applied’ field on the worksheet
    • in the View Direct Payment Schedule screen, add together all of the amounts in the Amount Recovered column with a Due Date on or after the Start date of hardship claim recorded on the worksheet up to and including
       
    • (where there aren’t any more scheduled payments) the end date recorded on the worksheet. Make a note of the result in the ‘Total of amount recovered’ field in the Arrears Calculation section
    • (where there are more scheduled payments) the day before the due date of the next scheduled payment after today’s date recorded at the cell labelled ‘Next Paydate’ on the worksheet. Make a note of the result in the ‘Total of amount recovered’ field in the Arrears Calculation section

      then

 

  • If
    • the recovery shown is 10% on the worksheet, enter ‘0’ in the ‘New recovery rate (from DMB)’ field on the worksheet
    • the recovery shown on the worksheet is 25%, enter the percentage value DMB has recommended that recovery should be adjusted to on the form TC871 in the ‘New recovery rate (from DMB)’ field on the worksheet
    • the recovery shown on the worksheet is 50%, enter the percentage value DMB has recommended that recovery should be adjusted to on the form TC871 in the ‘New recovery rate (from DMB)’ field on the worksheet

Note: The amount shown in the ‘Total arrears to pay’ field on the worksheet is the amount to pay for arrears.

Top of page

Step 4

Complete form R92TC. Follow the guidance in TCM0220100

  • select ‘Overpayment’ as the Reason for Issue
    • If there aren’t any more additional tax credits payments scheduled
    • use Function MAINTAIN HOUSEHOLD NOTES to record the following
      ‘TCMZ Final Hardship top up payment authorised on DD/MM/YYYY, R92TC No. XXXXXXX. There are no further payments due this financial year’
      Note: You must follow the guidance in TCM0152060 when you record the note and also follow the guidance in TCM0152160.
      then
    • send the papers to storage. Follow the guidance in TCM0074140 and take no further action.
    • If any other circumstances apply, go to Step 5.

Top of page

Step 5

Enter the amounts recovered between scheduled payment dates onto the worksheet to display the amounts to pay

  • add together the amounts in the Amount Recovered column for all payments with a Due Date in the period from and including the due date of the next scheduled payment, up to and including the day before the due date of the following scheduled payment shown on the worksheet
    Note: For the final payment, the period to consider will be from and including the due date up to and including the date shown in the ‘End date of award period’ field on the worksheet.
  • enter that amount in the column ‘Amount of recovery’ field on the worksheet for the next scheduled payment. The worksheet will then display the amount of top up payment to be made for that scheduled payment period
  • repeat these steps for each remaining scheduled payment
    then
     
    • If a scheduled payment is due within the next 14 days, go to Step 6.
    • If a scheduled payment isn’t due within the next 14 days
      • use Function MAINTAIN HOUSEHOLD NOTES to record the following
        ‘TCMZ Final Hardship top up payment authorised on DD/MM/YYYY, R92TC No. XXXXXXX. There are no further payments due this financial year’
        Note: You must follow the guidance in TCM0152060 when you record the note and also follow the guidance in TCM0152160.
        then
      • send the papers to storage. Follow the guidance in TCM0074140 and take no further action.

Top of page

Step 6

Complete form R92TC. Follow the guidance in TCM0220100

  • select ‘Overpayment’ as the Reason for Issue
    • If you’ve issued the first arrears or regular payment or had to re-calculate the regular scheduled payments, go to Step 7.
       
    • If you’ve issued a regular BF payment without re-calculating
    • set a BF for a date 14 days before the next scheduled payment is due
    • take no further action.
       
    • If you’ve issued the final scheduled payment, use Function MAINTAIN HOUSEHOLD NOTES to record the following
      ‘TCMZ Final Hardship top up payment authorised on DD/MM/YYYY, R92TC No. XXXXXXX. There are no further payments due this financial year’
      Note: You must follow the guidance in TCM0152060 when you record the note and also follow the guidance in TCM0152160.
      then
      • send the papers to storage. Follow the guidance in TCM0074140 and take no further action.

Top of page

Step 7

Prepare letter TC872 (Word 189KB)

Note: Delete the option for ‘cases where award payments adjusted’, as this information doesn’t apply when you issue manual top-up payments. Fill in the details of future payments and due dates.

Use the TAB button in the bottom line of the payment schedule on the letter to add lines if necessary

  • use Function MAINTAIN HOUSEHOLD NOTES to record the following
    ‘TCMZ DMB advises reduction in CYR approp. Initial PYT £XXX.XX authorised on DD/MM/YYYY. R92TC No. XXXXXX. Letter issued. Next payment due on DD/MM/YYYY’
    Note: You must follow the guidance in TCM0152060 when you record the note and also follow the guidance in TCM0152160.
  • send the letter to the customer
  • keep a copy of the letter with the casepapers
    • If there are more additional payments to be made, BF for a date 14 days before the next additional payment is due and take no further action.
    • If there aren’t any further payments to be made, send the papers to storage. Follow the guidance in TCM0074140 and take no further action.