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HMRC internal manual

Tax Credits Manual

Specialist areas - Complex: Complex cases - payment and accounting (AG)

To deal with payments and accounting for complex cases, consider steps 1 to 8.

Note: From 6 April 2017, customers will only get the Family Element of Child Tax Credit where they are responsible for a child or children born before that date.

Note: The individual child element of Child Tax Credit will no longer be awarded for third and subsequent children or qualifying young persons in a household, born on or after 6 April 2017, unless it meets the exception criteria.

Note: If you are dealing with a claim where an exception marker has been applied to any of the children/young persons included in the claim or the customer is reporting a change relating to an exception contact the Exception Team (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) For how to check if the exception marker has been applied, use TCM1000314.

Step 1

Manually calculate the payment profile. Ensure that you calculate the correct payment amounts in each entitlement period

  • schedule the payments to ensure payment is made weekly or four-weekly (depending on the payment cycle)
  • calculate any arrears immediately and pay these with the first payment. If the first payment is not due - for example, because the payment is to be paid in a four-weekly cycle and is not yet due - pay the arrears only
    Note: In polygamous or polyandrous marriages, you must separately calculate the entitlement to Child Tax Credit (CTC) for each partner in the claim.
  • go to Step 2.

Step 2

From the claim form, determine if any family benefits have been paid from an Other Member State (OMS).

  • If there are family benefits paid by any OMS, go to Step 3.
  • If there are no family benefits paid from any OMS, go to Step 6.

Step 3

Determine whether the UK or OMS is competent. Follow the guidance in TCM0287520. If the

  • UK is competent, go to Step 4.
  • OMS is competent, go Step 5.

Step 4

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 give a net figure of CTC due
  • where the OMS benefit exceeds CTC and Child Benefit due, then CTC won’t 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 Working Tax Credit (WTC) will be paid in full from the start date of the tax credit award.
    Note: Where Child Benefit should be in payment, but has not been claimed, the notional amount of entitlement must be used for the offset calculation.
    then
  • once the calculation is complete, go to Step 6.

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Step 5

From the total Child Benefit amount for the equivalent CTC award period

  • subtract the total of the child allowance (or OMS comparable benefit) payable for that same period
  • from the total CTC amount for the award period, subtract the total rate of Family Income Supplement (Republic of Ireland only) for the equivalent period
    • where the OMS does not pay a CTC equivalent, then CTC will be paid in full unless the OMS Child Benefit equivalent is greater than the UK Child Benefit, in which case the difference will be offset against the CTC
    • where the amount of UK Child Benefit exceeds the comparable benefit from the OMS, then CBO will make payment for the difference
      Note: Where Child Benefit should be in payment but has not been claimed, then the notional amount of entitlement must be used for the offset calculation.
      then
  • once the calculation is complete, go to Step 6.

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Step 6

Manually calculate the payment profile and work out the correct payment amounts in each entitlement period, if appropriate

  • set a Pay Day and schedule the payments to ensure they are received by the customer on the payment due date
  • ensure that any arrears due are calculated immediately and paid with the first payment unless payment is not due - for example, a four-weekly pay cycle. In this instance only, the arrears will be paid.
    Note: If you are working on a polygamous or polyandrous marriage case, you will need to work out the entitlement for each partner in the claim if different members have requested to claim CTC and/or Child Care Element.

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Step 7

Has a change of circumstances been provided?

  • yes, go to Step 8.
  • no, follow the guidance in TCM0284180.

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Step 8

If a change of circumstances has been provided, pass the new award amounts with details of any underpayment or overpayment to the team leader in the Manual Payments Team

  • where an OMS is involved, provide all the details of the original amount of CTC before the offset as well as the amount of the CTC actually paid
    Note: These details are forwarded to Revenue Finance in Worthing by the fifteenth of each month for monthly accounting details
    then
  • follow the guidance in TCM0284180.