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HMRC internal manual

Tax Credits Manual

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HM Revenue & Customs
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Payment - hardship (secondary hardship): Secondary hardship - referral received by TCO MAPTH team

Background

If a customer has suffered a reduction in their regular tax credit payments as a result of an adjustment that has been applied to their award, they may feel this reduced amount of tax credits will result in the household being in hardship.

In the first instance, TCO will look at all such hardship referrals following the guidance in TCM0216120.

If the customer still maintains the reduction in tax credits is causing them hardship, TCO will consider secondary hardship.

You may receive a secondary hardship WAM referral from

  • a Contact Centre
  • (an internal referral from) Director’s Complaint Team, MP Hotline, Customer Service and Support Group or Appeals.

You may also receive

  • a letter from a customer informing you that a reduction in their tax credits payment is causing them hardship

or

  • an internal referral from Customer Service and Support Group or Appeals Teams.

This reduction will have been caused by a recovery of an overpayment by

  • an in-year adjustment
  • cross-year recovery
  • a combination of in-year adjustment and cross-year recovery

or

  • cross award recovery

For more information about in year adjustments and cross year recovery, follow the guidance in TCM0232220.

Secondary hardship will only be considered in exceptional circumstances. This is in line with departmental policy. TCO will examine the customer’s income and expenditure to determine whether a relaxation of the recovery rates is appropriate. TCO may also decide to reject the secondary hardship claim.

In all instances, the customer will be required to provide evidence as to why they think they have exceptional circumstances.

Guidance

Step 1

If you are dealing with a new request for hardship, go to .

If you are dealing with a returned Income and Expenditure form (TC1133), go to .

If you are dealing with an expired BF date for an Income and Expenditure form (TC1133), go to .

If you are dealing with correspondence received because hardship has been refused, go to .

If you are dealing with an expired BF date for payment, go to .

Step 2

Check if the hardship referral has been through MAPTH (stage 1)

If the hardship referral has been through MAPTH (stage 1), go to .

If the hardship referral has not been through MAPTH (stage1)

  • refer to MAPTH (Stage 1) team to consider
  • take no further action

Step 3

Check if an overpayment recovery suspension has been applied, for how to do this use TCM1000368.

If a recovery suspension has been applied

  • refuse hardship
  • send customer a letter TC869
  • update Household Notes with message PM05,for how to do this use TCM1000001.

If a recovery suspension has not been applied

Check that the reason for refusal from MAPTH (stage 1) is still the same

If the reason for refusal is still the same, go to .

If the reason for refusal is not the same

  • refer to MAPTH I (stage 1) team to reconsider hardship
  • update Household notes with message PM20, for how to do this use TCM1000001.
  • take no further action

Step 4

If the reason for refusal is still the same

  • complete coversheet
  • send customer form TC1133, retain a copy for your records
  • update non retained Household Notes with message PM21, for how to do this use TCM1000001.
  • BF for four weeks.

Step 5

Check that the declarations on TC1133 are reasonable

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Monthly Figures

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  • check that the Tax Credit amounts declared match NTC system and the pay frequency is correct
  • check that the Child Benefit amount declared is correct and pay frequency is correct
  • check that any Social Security Benefit amounts are correct and the pay frequency is correct

Note: If customer declares an incorrect pay frequency you will need to calculate the correct weekly or monthly amounts. For example tax credits are paid weekly or four weekly but a customer may declare that they are paid monthly.

If the declarations on TC1133 are reasonable, go to .

If the declarations on TC1133 are not reasonable, go to .

Step 6

If form TC1133 has not been returned

  • update Household Notes with message PM22, for how to do this use TCM1000001.
  • PA case locally

Step 7

Calculate the customers’ disposable income

  • add all the income and minus the outgoings to obtain this figure
  • note this figure on the coversheet

If the disposable income is more than £20.00 per month, go to .

If the disposable income is less than £20.00 per month, go to .

Step 8

Contact the customer by phone or in writing for further information or proof to establish the correct income and expenditure then go to .

Step 9

Refuse hardship

  • send TC873 to customer
  • update Household Notes with message PM24, for how to do this use TCM1000001.
  • PA locally

Step 10

Consider adjusting the recovery rate

If recovery is Cross Year or Cross Award only, go to .

If recovery is In Year only, go to .

If recovery is in Cross Year (which may be as a result of Cross Award Recovery) and In Year, go to .

Step 11

Cross Year recovery or Cross Award recovery

  • print out the payment schedule for the current year
  • transfer payment information on to the Secondary Hardship Payment Profile Sheet
  • calculate the arrears payment by adding all the recovered amounts shown on the schedule from the date of first contact (from coversheet) to the date of the next payment
  • transfer this figure onto the Secondary Hardship Payment Profile Sheet
  • calculate the new recovery rate to bring the customer in credit by £20.00 per month, reducing in 5% increments
  • transfer the payment dates onto the Secondary Hardship Payment Profile Sheet
  • calculate the first payment due by adding the arrears payment noted earlier to the first new payment amount due
  • pass to the Independent Adjudicator to authorise
  • refer to Manual Payments Team for payment, for how to do this use TCM1000110.

Note: If the customer has a Post Office Card Account (POCA) ensure that the Manual Payment Referral is noted

  • update Household Notes with message PM26, for how to do this use TCM1000001.
  • BF for two weeks before next payment is due

Step 12

Calculate the amount of the adjustment required to ensure that the customer has disposable income of £20.00 per month.

  • calculate the amount of arrears due from the date the secondary hardship was received to the date you apply the adjustment using the Manual Backdating Spreadsheet (Excel 26.5KB)
  • refer to the Independent Adjudicator for authorisation
  • refer the one off manual payment to the Manual Payment Team, for how to do this use TCM1000110

Note: if the customer has a Post Office Card Account (POCA) ensure that the manual payment referral form is noted

  • access Adjust In Year Payments screen and enter the % adjustment, for how to do this use TCM1000523
  • issue TC886
  • update Household Notes with message PM03, for how to do this use TCM1000001.
  • PA locally
  • take no further action

Step 13

Check claim to see if there has been any changes to the award amount.

If the award amount has not changed

  • update coversheet
  • refer to Manual Payment Team for payment, for how to do this use TCM1000110
  • bf for two weeks before next payment is due.

If the award amount has changed

The award adjustment will have to be recalculated, go to .