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HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
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Payment - overpayments (D-E): disputed overpayments-establish three month time limit

Checklist

Before you follow this guidance make sure you

  • have the correct user roles to follow this guidance. Use 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 Catalogue’ from the Related links menu.

Background

From 6 April 2013 we have introduced a three month time limit for customers to dispute a tax credit overpayment.

We will only consider a dispute from a customer who disputes overpayments that have occurred in the year that the FAN relates to. If the FAN contains information on overpayments or recoveries for previous years or if multiple years are disputed, you must calculate 93 days from the issue date of each finalised decision notice of every tax year being disputed. This may mean that one year is accepted as disputed in time and the others cannot be accepted as they are out of the 93 day time limit of the finalised decision notice.

For example, Mary and Alan have overpayments from tax years 2009-10 and 2010-11. They are paying the overpayments back from their tax credit award in 2013-14. They were late reporting a change of circumstances in 2013-14 and there is a new overpayment shown on their final award notice. Their final award notice also shows the overpayments from the earlier tax years. Mary and Alan have 3 months from the date of their 2013-14 decision notice to dispute the new overpayment only. But they will not be able to dispute the overpayments from 2009-10 and 2010-11.This principle also applies to Mandatory Reconsiderations (MR) and Appeals. Where a customer has received an appeal decision letter from the tribunal or settled an appeal or MR, they will have three months from the decision date or the settled date. TCO staff will calculate 93 days from either of these dates to decide whether the dispute is in time.

Once the Disputed Overpayment time limit has expired, HMRC will not accept a dispute unless there are exceptional circumstances, for example, they were in hospital.

Some customers are issued a TC603R auto renewal notice. This means that they are not required to reply to their annual declaration unless they have a change to report. Customers with no changes to report will have three months from the 1st specified date on their finalised award notice TC603R (Auto), to dispute an overpayment.

Guidance

Step 1

Check the status of the year being disputed. For how to do this use TCM1000025.

If the year being disputed is finalised, go to .

If the year being disputed is unfinalised, go to .

Step 2

Customers can only dispute an overpayment once the claim is finalised, had a Statement of Account (SOA) issued or from the 1st specified date (1SD) of the TC603R (auto renewal). Tell the customer to await finalisation of the award before disputing again as this is when the exact overpayment can be established. Consider contacting the Renewals team to action the unfinalised year, if appropriate.

  • enter retained household note OE37 from TCM0166020. For how to do this, go to TCM1000001 
  • take no further action.

Step 3

Check if a Finalised Award Notice (FAN) has been issued for the tax year that is in dispute. For how to do this, use TCM1000119.

If a FAN has been issued

  • note the date the FAN was issued, this is your Disputed Overpayment (DOP) Time Limit start date
  • go to .

If a FAN has not been issued, go to .

Step 4

Check if a TC603R (Auto) has been issued, these will be Automatic Renewal cases. For how to do this use TCM1000204.

If a TC603 (Auto) has been issued,

  • note the 1st Specified Date (1SD), this is your DOP Time Limit Start Date. For how to do this use TCM1000002 
  • go to .

If a TC603 (Auto) has not been issued, go to .

Step 5

Check if a Statement of Account (SOA) has been issued. For how to do this use TCM1000042.

If a SOA has been issued,

  • note the date the SOA was issued, this is your DOP Time Limit Start Date
  • go to .

If a SOA has not been issued, go to .

Step 6

Follow guidance in TCM0230300 Overpayment - unissued notices.

Treat the dispute as in time, go to .

Step 7

Check the date the letter or TC846 was first received in HMRC.

Compare your DOP Time Limit Start Date to the date the dispute was first received in HMRC.

If the correspondence has been received within 93 days of the DOP Time Limit Start Date, go to .

If the correspondence was not received within 93 days of the DOP Time Limit Start Date, go to .

Step 8

Check Household Notes to determine if the customer contacted us or settled a Mandatory Reconsideration (MR) or appeal within 93 days of the DOP Time Limit Start Date. For how to do this use TCM1000067.

If there is a household note showing that the customer settled their MR or appeal within 93 days of the DOP Time Limit Start Date, go to .

If there is no household note showing that the customer settled an appeal within 93 days of the DOP Time Limit, go to .

Step 9

Check that the dispute was received within 93 days of the MR or appeal being settled.

If the dispute was received within 93 days of the MR or appeal being settled, go to .

If the dispute was not received within 93 days of the MR or appeal being settled, go to .

Step 10

Check Household Notes to determine if the customer contacted us to dispute an overpayment within 93 days of the DOP Time Limit Start Date. For how to do this use TCM1000067.

If there is a household note showing that the customer contacted us to dispute an overpayment within 93 days of the DOP Time Limit, go to .

If there is no household note present stating customer contacted us to dispute an overpayment within 93 days of the DOP Time Limit, go to .

Step 11

Check if we received the written dispute within 15 days of the household note stating the customer wanted to dispute

If the dispute has been received within 15 days, go to .

If the dispute has not been received within 15 days, go to .

Step 12

Check if the customer has mentioned that there were exceptional circumstances that prevented them from disputing their overpayment within the three months DOP time limit start date. COP26 explains that exceptional circumstances may mean that it was not possible for the customer to dispute on time, for example, they were, or a close family member was, seriously ill and so could not dispute the recovery of their overpayment.

If there are no exceptional circumstances which prevented the customer from disputing their overpayment within the three month DOP time limit, go to .

If there are exceptional circumstances which prevented the customer from disputing their overpayment within the three month DOP time limit, go to .

Step 13

Make a note of the exceptional circumstances the customer indicates prevented or delayed them from meeting their responsibilities on the SOP worksheet.

  • ensure the following parts are recorded

    • details of exceptional circumstances
    • details of the three month DOP Time Limit
    • details of when the dispute was received
  • discuss the exceptional circumstances with your manager who will consider the circumstances and decide whether the dispute is considered to be in time. If it is to be treated as in time they may then consider if any outstanding overpayment should be recovered in full or in part.

If your manager does not accept the exceptional circumstances for the dispute being late, go to .

If your manager accepts the exceptional circumstances for the dispute being late, go to .

Step 14

Check if the overpayment was caused by a late notification of a household breakdown.

If the overpayment was caused by a late notification of a household breakdown and Notional entitlement is appropriate

  • complete the Out Of Time letter TC1162

Note: ensure you select the relevant Notional Entitlement paragraphs

  • enter retained HH note OE26. For how to do this use TCM1000001 
  • refer the case to the Notional Entitlement team
  • go to .

If the overpayment has not been caused by a late notification of a household breakdown

  • complete the Out of Time letter TC1162
  • enter retained HH note OE26. For how to do this use TCM1000001 
  • send to storage
  • take no further action.

Step 15

The dispute is accepted as being received within the prescribed time limit of 93 days. Investigate the reason for the overpayment and decide if any corrective action is required or whether it is to be fully recovered, fully remitted or a partial remit applies

  • complete the Free Text Letter in SEES forms and letters
  • address all issues that the customer has raised
  • enter retained household note OD85. For how to do this use TCM1000001 
  • send to storage
  • take no further action.

Note: where multiple years are being disputed and you have established they are out of time, remember to include this in your reply to the customer.

Step 16

Suspend recovery of the overpayment. For how to do this use TCM1000335 

  • take no further action.