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HMRC internal manual

Tax Credits Manual

HM Revenue & Customs
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Payment - overpayments (F-P): Overpayments - HMRC and customer responsibilities (Info)

HM Revenue & Customs (HMRC) and the customer must meet the following responsibilities throughout a tax credit award to reduce the chance of an overpayment happening. These responsibilities are detailed in this guidance.

HMRC will

  • give the customer correct advice based on the information they give us
  • accurately record the information the customer provides when making or renewing a claim, and use that information to calculate and pay tax credits
  • include information the customer has given us about their family and income when we issue an award notice and, if the customer tells us that the award notice is wrong, correct the mistake and send an amended award notice
  • accurately record changes the customer tells us about and send a new award notice within 30 days
  • not hold the customer responsible for any overpayment that occurs because we have made a mistake and failed to correct it when the customer tells us about it.

The customer will

  • give HMRC accurate and up-to-date information when they make or renew their claim
  • tell HMRC about any changes that occur throughout the year so that we have accurate and up-to-date information
  • use the checklist (TC602(SN)) sent with each award notice to check all the items listed and tell us within 30 days of receiving the award notice if anything is wrong, missing or incomplete

Note: Usually, if the customer contacts us within 34 days of the date the award notice was issued, we can treat them as meeting this responsibility. The extra four days is to allow for postage. There may be exceptional circumstances where a longer period can be considered, but these should be considered on an individual basis, taking account of the facts at the time.

  • tell HMRC about changes that must be reported within a month of them occurring. For more information, use TCM0224260 
  • check that the payments they receive from us every week or every four weeks match the amounts we told them about on their award notice. And tell us if they have received payments that did not match the amount that was shown on the award notice during the time the overpayment arose

Note: It is in the customer’s interests to report a change of circumstances as soon as possible to reduce any overpayment that might arise as a result of that change.

Note: Where payment is made into a bank account, the customer must tell us as soon as they notice the overpayment. Some customers may not receive a statement until more than a month after receiving an award notice. It will also take some customers longer to check their accounts - for example, those with Post Office card accounts who may need to go to a Post Office to check the amounts they receive.

Note: The requirement for customers to tell us within 30 days about a mistake we have made on their award notice or with their payments will apply to all overpayments occurring from 6 April 2008. If you are dealing with an overpayment that arose in a tax year before 2008-2009, the customer must still tell us promptly about our mistake. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

Where HMRC

  • fails to meet its responsibilities and this causes a tax credits overpayment, and the customer has met all their responsibilities, then HMRC should not seek to recover that overpayment
  • fails to apply a change of circumstances correctly and this increases an overpayment, HMRC should not seek to recover the amount of the overpayment that arose as a result of that mistake

For example: a customer’s working hours reduce from 35 to 29 on 02/06/08. He reports the change on 20/06/08. On 24/06/08, his hours are incorrectly-captured as 30. The customer reports the mistake on 01/07/08 and his hours are corrected on the same day. HMRC should not seek to recover the overpayment that arose from 20/06/08, when the customer reported the change to 01/07/08, when the mistake was corrected. Any overpayment that arose from 02/06/06 to 19/06/08 remains recoverable.

  • meets all its responsibilities and the customer has failed to meet one or more of their responsibilities, HMRC will normally continue to recover the overpayment. However, there may be exceptional circumstances that mean the customer was prevented from meeting their responsibilities.

Exceptional circumstances will be considered by your Higher Officer.