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HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
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Renewals - change of circumstances: Renewals - family break-up - TCO only (Info)

Background

This guidance must be followed where a family break-up is notified during the renewal period. This is in order to ensure that the appropriate notifications are sent to the customers.

Notification of a family break-up can be received in a number of ways - for example

  • by phone
  • face-to-face
  • in writing
  • Unprocessed Change Of Circs work list.

Further guidance about family break-ups can be found in TCM0036100.

In a two-customer family, one of the customers may supply a new address for an absent partner when reporting a family break-up

  • If the address is complete, you can accept it
  • If the address isn’t complete or you suspect it might not be a genuine one, the absent partner’s address must be marked as Returned Letter Service (RLS).

Annual Declaration issued prior to notification of family break-up

You must check the status of the Annual Declaration. If the Annual Declaration

  • hasn’t been returned, you must mark the Annual Declaration as not served. The Annual Declaration will be automatically reissued, one for each customer

Note: If a customer is marked as RLS during the course of applying the family break-up, the issue of their Annual Declaration will be inhibited.

  • has been returned, you must check whether the claim was a single claim or a joint claim. If it was a joint claim, check the date to determine if it covers the time the couple were still together. If it doesn’t, disregard the Annual Declaration and mark as not served against both customers. The Annual Declaration will be automatically reissued, one for each customer.

If a customer has been marked RLS and as not served whilst the family break-up is being applied and an address is subsequently confirmed, the RLS marker will be removed. This will automatically prompt the re-issue of the Annual Declaration to the confirmed address.

Family break-up notified prior to issue of Annual Declaration

If an address is present for both customers in a joint claim, each customer will be issued with an Annual Declaration. If both Annual Declarations are signed and returned, then the claim can be finalised.

If a customer has been marked RLS whilst the family break-up is being applied, the issue of their Annual Declaration will be inhibited due to the RLS marker

If their new address is subsequently confirmed, the RLS marker will be removed when the new address is applied, this will automatically re-issue the Annual Declaration to the confirmed address of the customer who was marked as RLS.

Family break-up notified late

From 18 January 2010, there has been a change in policy for people who start living together or who separate, and who report changes late.

HMRC will take into account what they would’ve been entitled to receive had they promptly reported the change.

Where the customer has taken more than 93 days to report a change in their household, we’ll check the period from when the household ended to the day before their new effective date of claim and calculate

  • how much they would’ve been entitled to if they’d reported the change promptly

and

  • offset this amount against their old tax credits award to reduce their overpayment.

This is called Notional Entitlement.

The maximum period for notional entitlement will be from the date of the household break down to the date the customer notified us. The notional entitlement period can’t extend beyond the date the household breakdown was reported.

There is an Action Guide for this subject, select TCM0258080 to access it