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HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
, see all updates

Payment - overpayments (D-E): Overpayments - explanations - referral or letter received

Checklist

Before you follow this guidance make sure

  • you follow the guidance in TCM0138020
  • you have the correct user roles to follow this guidance
  • you are in the correct MU. Use TCM0322460 for the correct MU number.

Information

Use this guidance if a customer has not been provided with an explanation for an overpayment that has arisen against their tax credit payments. The request could come from

  • a Contact Centre
  • Debt Management and Banking (DMB)

or

  • a customer’s letter requesting an explanation of the overpayment.

The Contact Centre and DMB will send a referral form to you to enable you to provide the customer with an explanation of the overpayment.

You must determine the reason for the overpayment and explain this to the customer, either over the telephone or in writing. Where the customer is not satisfied with the explanation, you should tell them they can get a Code of Practice (COP) 26 ‘What happens if we have paid you too much tax credits’ from our website , by phoning the Tax Credits Helpline on 0345 300 3900 or by calling in to their local DWP Office.

If you cannot automatically remit all of the overpayment you must also tell the customer that, as long as they are within 93 days of the FAN, SOA or 1SD of the TC603R that the overpayment relates to, they can get a form TC846 ‘Request to reconsider recovery of overpaid tax credits’ from our website , by phoning the Tax Credits Helpline on 0345 300 3900 or by calling in to their local HMRC or DWP Office.

If the customer has been declared bankrupt or sequestrated you must work the explanation of the overpayment 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

Follow the guidance in TCM0224120 from Step 1 and Step 5 to Step 34 to determine the reason for the overpayment.

If Cross Award Recovery is taking place and corrective action needs to be taken, you must transfer the overpayment(s) back to the originating years (from the current claim to the previous claim(s). In order to do this,

  • put an Appeals marker on the year(s) where the overpayment happened
  • add HH Note ON19 to explain why you have set the Appeals marker
  • BF for 1 day
  • check the overpayment(s) have been transferred back
  • make correction on the system
  • remove the appeal marker
  • go to .

If corrective action needs to be taken and Cross Award Recovery is not taking place

  • consider updating the award. Follow guidance in TCM0224140 from Step 35 onwards.
  • go to .

If HM Revenue and Customs (HMRC) has failed one of more of its responsibilities and this error contributed to the overpayment and Cross Award Recovery is taking place

  • put an Appeals marker on the year(s) where the overpayment happened
  • add HH Note ON19 to explain why you have set the Appeals marker
  • BF for 1 day
  • check the overpayment(s) have been transferred back
  • make correction on the system
  • remove the appeal marker
  • calculate how much of the overpayment is due to HMRC error. Follow the guidance in TCM0224140 from Step 36 to Step 51
  • remit the amount of the overpayment you have calculated. Follow the guidance in TCM0230060
  • go to .

If HM Revenue and Customs (HMRC) has failed one of more of its responsibilities and this error contributed to the overpayment and Cross Award Recovery is not taking place

  • calculate how much of the overpayment is due to HMRC error. Follow the guidance in TCM0224140 from Step 36 to Step 51
  • remit the amount of the overpayment you have calculated. Follow the guidance in TCM0230060

Note: Use remission class 5b (official error) and complete the Remissions database with details of all the remissions you make.

  • go to .

If no corrective or remission action needs to be taken, go to .

Step 2

Note: If Cross Award Recovery is taking place you need to consider what information you can disclose. If you are dealing with an intermediary, ensure whoever the Customer they represent was part of the original household. If a Customer then ensure they were part of the original household. Then follow guidance below

If the request for an explanation of the overpayment has been received from an authorised intermediary or an agent for the customer, go to .

If the request for an explanation of the overpayment has been received from the customer, go to .

Step 3

For Cross Award Recovery Purposes, if you are satisfied that you are providing information to the Customer from the original household, you can disclose how much, when, who and how the overpayment(s) occurred.

Note: If the information does not relate to a Customer from the original household you cannot give details of ‘how’ any overpayments occurred.

Contact the customer by telephone. Follow the guidance TCM0094080

If you make contact with the customer

  • explain how their overpayment has occurred
  • tell them if you have remitted all or part of the overpayment because HMRC has failed to meet one or more of its responsibilities
  • go to .

If you are unable to contact the customer, go to .

Step 4

Ask the customer if they are satisfied with the explanation

If the customer is satisfied with the explanation, go to .

If the customer is satisfied with the explanation and asks for repayment details, go to .

If the customer is not satisfied with the explanation, go to .

Step 5

Check whether the customer’s claim has been ended due to their Universal Credit interest. For how to do this use TCM1000626.

If the customer has made a claim for Universal Credit, go to .

If the customer has not made a claim for Universal Credit, go to .

Note: Where a joint tax credit claim has been ended due to Universal Credit interest, it is possible for individual debts to be recovered by both TCO and DWP. Staff should check this before advising how debt is being recovered.

Step 6

Check if the customer’s tax credit overpayment has been transferred to DWP for collection. For how to do this use TCM1000634.

If debt has been transferred to DWP

  • explain this to the customer and if they require further information they will need to contact the DWP Helpline on 0345 600 0723
  • go to .

If debt is pending transfer to DWP

  • explain to the customer that the debt will be recovered by DWP who will make arrangements to collect
  • go to .

Step 7

Access the claim to check how the customer’s tax credits are being recovered. For how to do this use TCM1000199.

Note: It is possible to have both an in-year adjustment, cross year recovery and cross award recovery on one award.

If direct recovery is taking place

  • explain this to the customer
  • go to .

If direct recovery is not taking place, go to .

Step 8

If the customer requests more time to repay a tax credits overpayment or would like to pay tax credits in instalments

  • explain to the customer that they will need to contact the Payment Helpline on 0345 302 1429
  • go to .

If the customer is satisfied with the explanation, go to .

If the customer is not satisfied with the explanation, go to .

Step 9

Check if in year adjustment, cross year recovery, cross award recovery, or a combination of the three recoveries is in place. For how to do this use TCM1000522 and TCM1000561.

If cross year or cross award recovery has or is taking place

  • explain this to the customer. Follow guidance in TCM0232200
  • go to .

If in-year recovery is taking place

  • explain this to the customer. Follow guidance in TCM0232200
  • go to .

If an in-year adjustment, cross year recovery and cross award recovery is in place

  • explain this to the customer. Follow guidance in TCM0232200
  • go to .

Step 10

Update HH note with one or both messages OD55 and OE22 from TCM0166020. For how to do this use TCM1000001.

Note: You must give amounts and award versions where appropriate to provide clear information for anyone looking at the case.

If the customer is satisfied with the explanation, go to .

If the customer is not satisfied with the explanation, go to .

Step 11

Tell the customer that they can get

  • a Code of Practice 26 (COP 26) ‘What happens if we have paid you too much tax credits?’

and/or

  • as long as they are within 93 days of the FAN, SOA or 1SD of the TC603R that the overpayment relates to, form TC846 ‘Request to reconsider recovery of tax credits’ from our website , by phoning the Tax Credits Helpline on 0345 300 3900 or by calling in to their local HMRC or DWP Office
  • go to .

Step 12

For Cross Award Recovery Purposes, if you are satisfied that you are providing information to the Customer’s Representative from the original household, you can disclose how much, when, who and how the overpayment(s) occurred. 

Note: If the information does not relate to a customer from the original household you cannot give details of ‘how’ any overpayments occurred.

Prepare and issue the explanation letter to the authorised intermediary or agent

  • update household notes with one or both messages OD35 and OE22 from TCM0166020. For how to do this use TCM1000001
  • go to .

Step 13

Where a correction or a remit applies, you must check if there has been a household breakdown. For how to do this use TCM1000259.

If there has not been a household breakdown

  • prepare and issue the explanation letter to the customer that has requested the explanation
  • go to .

If there has been a household breakdown and the overpayment has not changed

  • prepare and issue the explanation letter to the customer who requested the explanation
  • go to .

If there has been a household breakdown and the overpayment has reduced due to the correction applied or remit

  • prepare and issue the explanation letter to each customer
  • go to .

Step 14

Update household notes with one or both of the messages OD34 and OE22 from TCM0166020. For how to do this use TCM1000001.

Note: You must give dates, amounts and award versions where appropriate to provide clear information for anyone looking at the case.

If the customer has mentioned they have been declared bankrupt or sequestrated, follow the guidance in TCM0224040.

If the customer has not mentioned they have been declared bankrupt or sequestrated, go to .

Step 15

Send papers to storage. Follow the guidance in TCM0074140.