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HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
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Payment - overpayments (D-E): Overpayments - disputed liability following household breakdown

Checklist

Before you follow this guidance, make sure

  • you follow the guidance in TCM0138020
  • you have the correct user roles to follow this guidance

Background

Following a household breakdown, if an overpayment is created, the customer and/or the partner may dispute who is liable to repay the overpayment.

Tax Credit Office (TCO) is responsible to decide whether there is any joint liability for any overpayment created after the household breakdown date, or whether each customer is required to repay a specified amount.

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

50/50 policy should be applied to any overpayment created between the date the household breakdown occurred and the date the household breakdown was notified.

Note: The customer and the partner can agree to pay different amounts - for example, 70/30. If this agreement fails, we’ll revert back to the 50/50 policy.

If the overpayment includes payments made after the date the household breakdown was notified, the person who received those payments will be responsible to repay them.

For customers who have moved to Universal Credit (UC), any outstanding debt will automatically split 50 /50, unless requested otherwise by either the customer and/or partner.

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.

Step 1

Check to see if there is UC on the claim.  For how to do this, use TCM1000626

Note: Make a note of which customer has the UC interest on a TC648

Check the date the household breakdown happened. For how to do this, use TCM1000217

  • make a note of this on a TC648
  • go to .

Step 2

Check Household Notes to determine when the household breakdown was notified. For how to do this, use TCM1000067.

If there is a note that confirms the date the household breakdown was notified

  • make a note of this on form TC648
  • go to .

If there is not a note which confirms the date the household breakdown was notified, go to .

Step 3

Use the date the household breakdown was applied as the date notified. For how to do this, use TCM1000437

  • make a note of this on form TC648
  • go to .

Step 4

Check the total amount of CTC and WTC overpayment on the award that the household breakdown relates to. For how to do this, use TCM1000216

  • make a note of the total CTC (A1) and WTC (B1) figures separately on a TC648

Note: You will need to repeat this action on all years impacted by the household breakdown.

  • go to .

Step 5

Check which payments were made after the household breakdown was notified. For how to do this, use TCM1000438

Note: Do not include any payments that were issued on the day the household breakdown was notified.

Note: You will need to repeat this action on all years impacted by the household breakdown.

  • add together all individual CTC payments made after the household breakdown was notified for each customer separately
  • make a note of these figures as (A2) for the customer and (A3) for the partner
  • add together all WTC payments made after the household breakdown was notified for each customer separately
  • make a note of these figures as (B2) for the customer and (B3) for the partner
  • go to .

Step 6

Check if PVE payments were made after the household breakdown was notified. For how to do this, use TCM1000440

Note: Do not include any PVE payments that were issued on the day the household breakdown was notified.

Note: You will need to repeat this action on all years impacted by the household breakdown.

  • make a note of the PVE payments made to the customer (C3)
  • make a note of the PVE payments made to the partner (C4)
  • go to .

Step 7

For each customer, compare the total amounts for CTC and WTC made after the date the household breakdown was notified with the total outstanding overpayment figures for CTC and WTC

Note: You will need to repeat this action on all years impacted by the household breakdown.

Note: You can use the Disputed liability spreadsheet (Excel 20KB) in this step. Alternatively, you can note these figures on form TC648.

  • calculate the payments that the customer and partner are each solely responsible to repay
  • the customer’s solely liable to repay
    • CTC payments made (A2)
    • WTC payments made (B2)
    • PVE payments made (C3)
    • update Household Notes, using the ‘Debt Recovery’ category, with message OE15 from TCM0166020. For how to do this, use TCM1000001
  • the partner’s solely liable to repay
    • CTC payments made (A3)
    • WTC payments made (B3)
    • PVE payments made (C4)
    • update Household Notes, using the ‘Debt Recovery’ category, with message OE16 from TCM0166020. For how to do this, use TCM1000001
  • go to .

Step 8

For each customer compare the total amounts for CTC and WTC made after the date the household breakdown was notified with the total outstanding overpayment figures for CTC and WTC

Note: You will need to repeat this action on all years impacted by the household breakdown.

Note: You can use the ‘Disputed liability spreadsheet’ in this step. Alternatively, you can note these figures on form TC648.

  • calculate the payments that the customer and partner are each 50% liable to repay
  • using the total CTC overpayment figure (A1) deduct the following,
    • CTC payments made to the customer (A2)
    • CTC payments made to the partner (A3)
    • make a note of CTC overpayment balance (A4)

Note: CTC figure (A4) will be split 50/50 between the customer and the partner

  • using the total WTC overpayment figure (B1) deduct the following,
    • WTC payments made to the customer (B2)
    • WTC payments made to the partner (B3)
    • PVE payments made to the customer (C3)
    • PVE payments made to the partner (C4)
    • make a note of WTC overpayment balance (B4)

Note: WTC figure (B4) will be split 50/50 between the customer and the partner.

  • update Household Notes using the ‘Debt Recovery’ category with message OE17 from TCM0166020. For how to do this, use TCM1000001
  • go to .

Step 9

If the whole of the overpayment after the household breakdown notification date is to be recovered from one customer only

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • update Household Notes using the ‘Debt Recovery’ category with message OE14 from TCM0166020. For how to do this, use TCM1000001
  • go to .

If part of the overpayment after the household breakdown notification date is to be recovered from each customer

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • update Household Notes using the ‘Debt Recovery’ category with message OE14 from TCM0166020. For how to do this, use TCM1000001
  • go to .

If part of the overpayment after the household breakdown notification date is to be recovered from one customer and the remaining overpayment is to be split between both customers

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • update Household Notes using the ‘Debt Recovery’ category with message OE14 from TCM0166020. For how to do this, use TCM1000001
  • go to .

If part of the overpayment after the household breakdown notification date is to be recovered from both customers and the remaining overpayment is to be split between both customers

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • update Household Notes using the ‘Debt Recovery’ category with message OE14 from TCM0166020. For how to do this, use TCM1000001
  • go to .

Step 10

Remove the ‘Dispute’ marker from the award. For how to do this, use TCM1000439

  • take no further action.