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HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
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Specialist areas - complex: complex cases - manual renewal payments (AG)

To deal with manual renewal payments for complex cases, consider steps 1 to 25.

Step 1

Note: The finalised award details will have been recorded on form TC648 and this will be in two parts

  • the amounts the customers were due for the Previous Year (PY) award and the amounts they were paid together with details of any overpayment or underpayment of Child Tax Credit (CTC) and/or Working Tax Credit (WTC)
  • the amounts of CTC/WTC the customers are due for the Current Year (CY) award (this will be nil if the customers have no entitlement).

Check that the form TC648 has been completed correctly with the above information.

  • If form TC648 has been correctly completed, go to Step 2.
  • If form TC648 has not been correctly completed, follow the guidance in TCM0284280.

Step 2

Check form TC648 to determine if there is an overpayment or underpayment recorded.

  • If an underpayment has been recorded, go to Step 3.
    Note: Payments of less than £1 must not be made. Any shortfall will be picked up and dealt with by the tax credits computer in due course. Treat as if there is not an overpayment.
  • If an overpayment has been recorded, go to Step 6.
  • If there is not an underpayment or overpayment, go to Step 13.

Step 3

Complete the form R92TC. Follow the guidance in TCM0220100. Select ‘Complex Case’ as the Reason for Issue

  • when the form R92TC has been authorised, go to Step 4.

Note: A separate form R92TC will be required for each customer if CTC and / or WTC are separately paid.

Step 4

Forward form R92TC to the appropriate office

  • (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)

Step 5

Use Function MAINTAIN HOUSEHOLD NOTES, select the ‘Payments’ category and enter the following

‘TCMZ R92TC XXXXXXX (insert serial number) for £XXX.XX issued to CLMT1 / CLMT2 (specify) for U/P for PY’

Note: You must follow the guidance in TCM0152060 when you record the note and also follow the guidance in TCM0152160.

Step 6

Check step 1 on the TC648 to determine if the customer is entitled to tax credits for CY.

  • If the customer has an award for CY then you can recover any overpayment by cross-year recovery, go to Step 11.
  • If the customer is not entitled to tax credits for CY recover the overpayment directly from them, go to Step 7.

Step 7

Add together any provisional payments that the customer has received since the beginning of PY.

Note: The payments they will have received will have been recorded on the Manual Provisional Payments Proforma.

Step 8

Note the total amount on form TC648 along with the overpayment for PY

Step 9

Contact Business Helpdesk through your Technical Advice Line (TAL) liaison officer (or, for Northern Ireland, your Helpdesk Liaison Officer)

  • explain that the case is complex, has no future entitlement and has an overpayment
  • tell them that you need guidance on how to action the case
    Note: Business Services will then arrange with Accounting and Payment Service (A&PS) how to manually action the case.
  • go to Step 10.

Step 10

Stockpile the case until you receive a reply giving guidance on how to action the case

  • take no further action.

Step 11

Follow the guidance in TCM0284240, then decide what percentage of the entitlement can be recovered. To do this

  • use the calculation sheet you completed whilst following the guidance and compare the untapered and tapered award amounts in the ‘total’ column. If the figures
    • are the same, this is a maximum award and the recovery percentage to be applied is 10%, go to Step 12.
    • are not the same, check the CTC elements on the form. If the customer
      • is only receiving family or family/baby element, the recovery percentage to be applied is 100%
      • is not only receiving family or family/baby element, the recovery percentage to be applied is 25% Note: The baby addition of the family element will be withdrawn on 6 April 2011. Award notices issued from 11 October 2010 will show a revised award for 2011/2012, but will not explain that the baby element will stop in April 2011.

        Note: The recovery of tax credit debt from ongoing awards  increased from 25% to 50% from the 06th April 2016 for those customers whose total household income is greater that £20,000. From 10th October 2015, where a change of circumstances is reported and applied, the award notice issued will show the revised provisional payments for 2016/2017 based on the new 50% recovery rate for those customers who fulfil the 50% criteria.

        then

      • go to Step 12.

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Step 12

On form TC648 make a note of the percentage amount you are going to recover

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Step 13

Use the payment details recorded on the Manual Provisional Payments proforma

  • add together the amount of provisional payments issued to the customer
  • record the total on form TC648
    Note: If you are already using form TC648 from following the cross-year recovery process at Step 11, then add this figure to the form.
  • go to Step 14.

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Step 14

Deduct the total amount of any provisional payments issued for

  • Child Tax Credit (CTC) from the amount of the CTC award
    and/or
  • Working Tax Credit (WTC) from the amount of the WTC award
    then
  • note the calculation and the resulting amounts on form TC648
    • If you can recover the total amount from the relevant tax credit, go to Step 17.
    • If the amount of the provisional payments is more than the amount due to be paid for that tax credit, deduct the amount from any remaining tax credits. This is to make sure that the amount is recovered in year. Go to Step 17.
    • If there are not any other tax credits from which to deduct the amount, recover the amount from next year’s entitlement, go to Step 15.

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Step 15

Use Function MAINTAIN HOUSEHOLD NOTES, select the ‘Payments’ category and enter the following

‘TCMZ Provisional PYT made are more than entitlement for XX / XX. Amount still to be recovered is £XX.XX for year XX / XX. O/P to be recovered for XX / XX is £XX.XX’

Note: You must follow the guidance in TCM0152060 when you record the note and also follow the guidance in TCM0152160.

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Step 16

On form TC648 enter the amount still to be recovered from next year’s entitlement for PY and CY

Note: This amount will need to be kept in view when calculating next year’s entitlement.

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Step 17

Check the information provided to determine if any Family Benefits are in payment from any Other Member State (OMS). If Family Benefits

  • are in payment from another member state, go to Step 18.
  • are not in payment and there is an overpayment, go to Step 21.
  • are not in payment and there is not an overpayment, go to Step 22.

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Step 18

Note: Where there is payment of Family Benefits from another member state, it will have been established last year whether the OMS or the United Kingdom (UK) is competent. Determine whether the customer’s details are still the same as those decided last year

  • where the UK is competent, go to Step 19.
  • where the OMS is competent, go to Step 20.

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Step 19

To calculate the offset of arrears

  • calculate the rate of the benefit in payment from the OMS, from the award start date up to four weeks from today
  • offset this amount against the amount of CTC due to be paid. This will give a net of CTC still to be paid
    Note: If the OMS benefit amount exceeds the CTC, CTC will not be payable for the period of the offset. CTC will be paid in full from the end of the calculated four-week period.
    Note: Any WTC will be paid in full from the start date of the tax credits award.

    then

 

  • If the customer has an overpayment, go to Step 21.
  • If the customer does not have an overpayment, go to Step 22.

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Step 20

Use form TC648 to calculate the amount of CTC to be paid. To calculate the amount

  • contact Child Benefit Office (CBO) and ask what the weekly amount of Child Benefit is paid to the customer
    Note: Where UK Child Benefit should be in payment but has not been claimed, ask CBO to provide a notional amount of entitlement and use this figure in the offset calculation.
  • calculate the number of weeks in the CTC award period and round down to the nearest whole week
  • multiply the number of weeks in the CTC award period by the amount of the weekly UK Child Benefit payment
  • multiply the amount of the equivalent OMS Child Benefit by the number of weeks in the CTC award period
  • deduct the total rate of the OMS Child Allowance (or the comparable benefit in the OMS) for that same period, from the amount of the weekly ChB payment (A). Note down figure A
  • multiply the weekly rate of the equivalent OMS CTC by the number of weeks in the award period
  • deduct the total rate of the equivalent OMS CTC from the CTC amount payable (B). Note down figure B
    Note: If there is no equivalent OMS CTC payable to the customer, note down the full amount of CTC payable to the customer instead of figure B
  • check figures A and B
    • If both figures are negative, tax credits are not payable, take no further action.
    • If both figures are positive, figure B is due to be paid, go to Step 21.
      Note: The UK Child Benefit will pay the amount in figure A.
       
    • If figure A is negative and figure B is positive, add the figures together. If the resulting figure is
    • If figure A is positive and figure B is negative, there is nothing due to be paid to the customer. The UK Child Benefit Office will pay the amount in figure A.

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Step 21

To apply the percentage amount of recovery

  • deduct the percentage amount you are recovering from the remaining amount of tax credits due to be paid to the customer
    Note: Calculate the amount of each tax credit (WTC/CTC) separately.
  • make a note on form TC648 of
  • the calculation
  • the amount of tax credits that you are recovering
  • the amount of tax credits that are still due to be paid
    For example: ‘CTC left to be paid - 25% recovery = what is due to the customer in the remaining award period’

Note: If the customer is not now entitled to one of the tax credits in the current year but they have an overpayment for this tax credit in the previous year for that tax credit, you must add this amount to any overpayment on the remaining tax credit.

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Step 22

To calculate the amounts of tax credits and dates of payments due to the customer

  • use the amounts of tax credits remaining to calculate the payment profile and work out the correct payment amounts in each entitlement period, if appropriate
  • use the same pay day that was selected for the customer last year
  • schedule the payments to ensure that they are received by the customer on the payment due date
  • ensure that any arrears due are calculated immediately and pay them with the first payment. If the payment is not due (four-week pay cycle), only the arrears must be paid.
    Note: For polygamous or polyandrous marriages, if there is more than one main carer of the children, work out the entitlement for each partner in the claim.

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Step 23

Pass the following details to your manager for the accounting records

  • the amount of the entitlement of WTC for CY
  • the amount of the entitlement of CTC for CY
  • the amount of any underpayment issued to the customer for PY
  • the amount of the overpayment for PY
  • the amount of the overpayment being recovered, in year
  • the amount of any overpayment that has carried forward
    Note: Include any overpayment for CY separately where the provisional payments paid are more than the award amount.
    and if

 

  • a future change of circumstances has been provided, pass the new award amounts for each tax credit with details of any underpayments or overpayments
    or where
  • an Other Member State was involved, provide details of the original amount of CTC before the offset, as well as the amount of CTC actually paid.

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Step 24

Issue the first manual payment. Follow the guidance in TCM0284220.

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Step 25

Store form TC648, calculation sheets and any other documentation in BF.