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HMRC internal manual

Tax Credits Technical Manual

Decision Making - Revised decisions, considering evidence and recording of decisions: Decision Notices / Recovery Notices / Other Notices

Tax Credits Act 2002, Section 23 (1)

Decision notices are issued by HMRC whenever a new decision is made on either the rate of award (in year) or entitlement (when a conclusive decision is made or revised) and there is specific legislation governing the issue of these.

We must issue a decision notice following certain decisions. The precise wording of Section 23 (1) is as follows:

When a decision is made under section 14(1), 15(1), 16(1), 18(1), (5), (6) or (9), 19(3) or 20(1) or (4) or regulations under section 21, the Board must give notice of the decision to the person, or each of the persons, to whom it relates.

Notice of a decision must state the date on which it is given and include details of any right to appeal against the decision under section 38.

To meet legal requirements a decision notice (issued under s23) must include the decision, the date of the decision and details of the claimant’s right to a review under section 21A and of any subsequent appeal rights as per section 38 of the Tax Credits Act.

A separate s18 decision notice is not needed for reply not required cases. For these cases notice has been given by replaying the year’s details to the claimant on the s17 notice which requires them to notify HMRC whether there are any inconsistencies and whether their income has gone above or below a specified range. The absence of a reply in these cases enables HMRC to make an s18 decision after 1SD. The s17 notice then takes on the function of the s18 decision notice required under s23 of the TCA. However if a reply is received in an auto renewal case which alters the circumstances or income then a decision notice giving the s18 decision is required to meet the s23 requirement.

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Requirements to meet our own Code of Practice

HMRC leaflet Code of Practice 26 (COP26) explains why overpayments happen, and how to pay them back. It also tells claimants when they don’t have to pay an overpayment back and how to dispute an overpayment. For HMRC to comply with its obligations and apply COP26 to the recovery of any overpayment, the claimant must be able to check if anything is wrong, missing or incomplete from their award. For this reason a decision notice to meet COP26 responsibilities must also replay the details from the claim, such as hours worked, income, and children.

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Time limit on issuing a decision notice

The law is silent on a time limit for the issue of a decision notice under s23(1) of the TCA. However it is widely accepted policy that this should be within a reasonable time following the making of the decision. There is no definition of a reasonable time.

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Recovery Notices

Information on recovery notices and what they must contain can be found at TCTM08303.

Note: in cases where an overpayment is recovered from a tax credits award, the initial decision notice notifying the debt issued under s23(1) also fulfils the role of a recovery notice and as such must quote the legislation used s29(4).

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Other Notices

Not all notices are legally required, for example a Statement of Account (SOA) (TC607) is issued after the end of the tax year to notify a claimant of a debt created earlier in the tax year. There are five different types of SOA, these are issued when:

  • (Type A)
    • Current year provisional payments are stopped/ceased because a full reply to a declaration notice (s17) has not been received by the first specified date or the declaration is deemed incomplete
    • HHBD case and current year provisional payments are stopped/ceased because a full reply to both declaration notices (s17) has not been received by the first specified date
  • (Type B) An s17 has been returned which shows a change in circumstances but no change in circumstances has been reported
  • (Type C) A change in circumstances or correction ends previous year or earlier entitlement, but there was an award or provisional award for a later year
  • (Type D) The household has been withdrawn from tax credits
  • (Type E) Entitlement has ended because of transferring to UC

Note: from April 2011 appeal rights have been added to one category of SOA, effectively making it a decision notice. This is where there has been an award but we have since found that the claimant was not entitled to tax credits back to the 6th of April (or the start of the award, whichever is the later).

Note: for type B, C, D and E there is no legal requirement to issue these notices, but HMRC does so as a customer service.

For type A there is still no legal requirement to issue a notice under s23 as the cessation of provisional payments is not a notifiable decision as defined under s23 TCA. However, see below.

Tax Credits (Claims and Notifications) Regulations 2002, Reg 11(3)(b)

This allows claimants to request a restore following the non-return of an annual declaration within 30 days of the SOA being issued. The regulations state that:

11(3) The claim shall be treated as made -

(b) in a case where the declaration, not having been made by 31st July next following the end of the tax year to which the claim relates, is made within 30 days following the date on the notice to the claimant that payments of tax credits under section 24(4) of the Act have ceased due to the claimant’s failure to make the declaration, on 6th April next following the end of the tax year to which the claim relates.

This means that although HMRC do not need to issue a notice under s23 TCA, failure to do so would mean that the 30 day period would not begin until they actually issue the notice. Failure by HMRC to issue a SOA could allow claimants to ask at any time for a claim to be treated as made from the relevant April. HMRC would have no option but to allow this as long as a full annual declaration was subsequently made within 30 days. Therefore for type B a notice should be issued as soon as possible.

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Statement Like an Award Notice (SLAN)

A SLAN is a notice to tell the claimant that we have amended their provisional payments. This is not a decision notice as it is not defined under s23 and it only deals with provisional payments which are discretionary. It also has no appeal rights attached. There is no obligation for HMRC to issue these notices but they allow the claimant to be kept up to date with what circumstances we have based their provisional payments on and to tell us about any changes promptly.