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HMRC internal manual

Tax Credits Manual

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HM Revenue & Customs
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Extra information: glossary: S

S17

S17 is the abbreviation for Section 17 of the Tax Credit Act 2002.

This legislation defines the circumstances that affect entitlement to, or the amount of, tax credits payable. These are known as the ‘relevant circumstances’.

S17 states that as part of the finalisation process, an S17 Notice must be issued to the customer specifying their relevant circumstances. The customer must then agree these or give details of where they are different.

In auto renewal cases, S17 allows the customer to be advised that if they don’t reply then this can be treated as their agreement.

S17 declaration

An S17 declaration is the customer’s reply to the Annual Declaration form TC603(D) or TC603(D)2.

The declaration can be given

  • in writing, by replying to the Annual Declaration form or during a local interview
  • verbally to the Tax Credits Helpline or during a local interview
  • electronically, using the internet.

S17 notice

An S17 notice is issued to the customer to

  • determine the correct amount of tax credits that should have been paid for in the previous year (PY)
  • calculate the initial award for the current year (CY).

The S17 notice specifies details of the relevant circumstances of the household that affect entitlement to, or the amount of, tax credits payable. The customer must then agree these or give details of where they’re different.

Automatic renewal

The S17 Notice issued to customers who qualify for automatic renewal is the Annual Review form TC603(R).

A reply isn’t required unless the customer’s circumstances aren’t correct on the TC603(R) or their household income falls outside the income limits.

Non-automatic renewal

The S17 notices issued to customers whose claims aren’t automatically renewed are the

  • Annual Review form TC603(R)
    • and
  • Annual Declaration form TC603(D) (or Annual Declaration form TC603(D)2 if the customer is required to declare income for PY and actual income for PY-1).

A reply is always required to the TC603(D) or TC603(D)2. The reply is known as the S17 Declaration.

S18

S18 is the abbreviation for Section 18 of the Tax Credit Act 2002.

This legislation requires the board of Her Majesty’s Revenue and Customs (HMRC) to make a final decision regarding a person or persons’ entitlement to tax credits, based on the completed S17 Notice that has been returned by that person or persons.

S18 provides the board of HMRC with the power to make a final decision on a person or persons’ entitlement to tax credits where no S17 Notice has been received by the 1st Specified Date.

S18 also covers

  • information provision
  • using an estimate of earnings
  • action to be taken at the 2nd Specified Date.

S19

S19 is the abbreviation for Section 19 of the Tax Credit Act 2002.

The S19

  • sets out when an enquiry may be opened (the timescale for opening the enquiry)
  • sets out that on conclusion of the enquiry, a decision must be made
  • provides that the customer can request that the enquiry be closed (guidance is available on how to do this).

This legislation allows us to open an enquiry into a customer’s entitlement in the ‘enquiry window’ which is between the date their S18 decision was made and up to 12 months after the final date to reply on their Annual Declaration. We can then change a customer’s entitlement where we find that the original decision was wrong. We can only use this power once.

Note: Unless you work on a team that has been given specific authority to use S19, only people working on Compliance will have authority to proceed when they’re making a new decision under S19. If you have any doubts, please speak to your manager.

S20

S20 is the abbreviation for Section 20 of the Tax Credit Act 2002.

Where we discover a customer’s entitlement is wrong and this is because of fraud or neglect by them (or where their income tax liability has changed), we can use S20 to change their entitlement. We can only make a S20 decision after the S19 ‘enquiry window’ has closed. We then have up to five years after the end of the relevant tax year to change the decision.

Note: Unless you work on a team that has been given specific authority to use S20, only people working on Compliance will have authority to proceed when they’re making a new decision under S20. If you have any doubts, please speak to your manager.

S21

S21 is the abbreviation for Section 21 of the Tax Credit Act 2002.

This legislation allows us to change a customer’s entitlement after an S18 decision has been made when we have made a mistake and

  • the change will be in the customers favour (the money they’re entitled to will go up)
  • the customer didn’t materially contribute to the error.

Sandwich course

A student on a sandwich course

  • undergoes alternate periods of full-time study and periods of commercial or industrial experience
  • must attend full-time periods of study for an average of at least 19 weeks in each year of the course
  • is treated as attending a full-time course of advanced education or study.

Secondary hardship

If a customer’s regular tax credits payments have been reduced they may feel this is causing their household hardship. The reduction could have been caused by

  • an in-year recovery in the case of a notional overpayment
  • recovery of an overpayment from a previous award period (cross-year recovery)
  • a combination of both.

The hardship claim will be considered and, if appropriate a manual adjustment to increase the customer’s payments may be made.

Following initial consideration of the hardship claim, no matter what the outcome the customer may still maintain that the reduction in tax credits payments is causing hardship. This is known as ‘secondary hardship’.

Self-employed

A person is self-employed when they work for themselves and are not employed by an employer.

Self-sufficient

A person is self-sufficient if they

  • have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the United Kingdom (UK) during their period of residence

Note: Social assistance is Income Support, income-based Jobseekers Allowance or Pension Credit.

and

  • have comprehensive sickness insurance (CSI) in the UK for themselves and their family members.

Note: To see what documents are acceptable as evidence of CSI see glossary, extra information, Comprehensive Sickness Insurance (CSI) TCM0320080.

Set off

This is where an underpayment is used to reduce or clear an overpayment before determining if any underpayment can be issued to the customer.

Severely disabled

A customer is severely disabled when they’re receiving

  • Disability Living Allowance (DLA) care component at the highest rate
  • Attendance Allowance (AA) at the higher rate
  • either of DLA or AA (but payment has been suspended because the recipient is in hospital)
  • Personal Independence Payment daily living component at the enhanced rate.

Severely disabled child

A severely disabled child is a child or qualifying young person who the Disability Living Allowance care component at the highest rate is payable for them (or would be payable but for suspension or hospitalisation).

For more information about being a patient, use TCM0122050.

Statement of account

A statement of account (SOA) is a notice issued for a particular award year where

  • the award is terminated because the initial award notice wasn’t signed and returned by the end of the reminder cycle
    • or
  • the provisional award is terminated because a full reply to an S17 Notice hasn’t been received by the 1st Specified Date
    • or
  • a change of circumstances or correction ends the tax credits entitlement before the beginning of the award year and results in no tax credits entitlement for the year.

Statement of circumstances

On the Annual Declaration form TC603D or TC603D(2), the customer confirms if their personal circumstances are correct for the whole of the award period being finalised. This confirmation is known as the ‘statement of circumstances’ (SOC).

The customer must check their Annual Review form and any award notices they have received for the award period. If any details are incorrect, or the customer needs to tell us about any changes, they must indicate this on their Annual Declaration form.

The SOC

  • is correct when the customer indicates that changes or corrections aren’t required
  • isn’t correct when the customer indicates that a change of circumstances or correction is required.

Student

A student is a person who

  • is enrolled in a recognised educational establishment in the United Kingdom (UK) for the principle purpose of following a vocational training course
    • and
  • has comprehensive sickness insurance (CSI) in the UK for themselves

Note: To see what documents are acceptable as evidence of CSI see glossary, extra information, Comprehensive Sickness Insurance (CSI) TCM0320080.

and

  • can assure the Secretary of State that they and their family members have sufficient resources to avoid them becoming a burden on public funds.

Note: For more information on sufficient resources, use the definition of Self -sufficient, TCM0320400

Subject Access Officers

Subject Access Officers (SAOs) have the specific responsibility of taking over and working any subject access requests in conjunction with the case owner and with the support and guidance of the Area Customer Relations Manager (ACRM) / Recovery Managers.

The SAO will

  • on receipt of a subject access request notify the ACRM / Recovery Manager
  • fax a copy to the Data Protection Subject Access (DPSAR) Team in Longbenton
  • ensure retrieval and collation of the relevant records
  • edit those records as necessary in strict accordance with the exemptions permissible under the terms of the Data Protection Act
  • working with the DPSAR Team provide access to the individual in the most appropriate form.

Subject Access Request

A Subject Access Request (SAR) is a written application in the form of a letter, email or fax from an individual requesting information about themselves that is held by HM Revenue & Customs.

The SAR Team in Preston deals with these requests.

There are three types of SAR

  • a full SAR, which asks for everything
  • a phone call and correspondence SAR
  • a phone call only SAR.

Summary proceedings

Summary Proceedings are conducted in the Magistrates Court.

Cases in the Magistrates Court are heard before ‘The Bench’, which normally comprises

  • three (or occasionally two) magistrates, sitting together, who are drawn from the local community
    • or sometimes
  • a professional magistrate, who is a district judge and who sits alone.

There are limits to the age and size of debts which can be enforced in the Magistrates’ Court. Currently the total of debts entered in the Magistrates’ Court must be less than £2,000 and 12 months old.

For tax credits purposes, the age of the debt is determined from the date of the finalisation notice (form TC602).

Suspension reason

A suspension reason is a required entry when you suspend any payments made to the selected customer in the selected household.

Direct payments (BACS or Cashcheque payments) can be suspended for the following reasons

  • Auto-BACS-Invalid Bank Details
  • Auto-Death of Applicant
  • Auto-Giro-Address found to be RLS
  • Invalid Bank Details
  • Manual Payment Request
  • No Bank Account Details
  • Section 17 Not Issued.