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HMRC internal manual

Tax Credits Technical Manual

Compliance Examinations: Section 14 - Initial decisions pre-award examination

The Tax Credits Act 2002, Section 14

Section 14 gives us the power to investigate a new claim before the initial decision is made:

S14 (1) On a claim for a tax credit the Board must decide -

    whether to make an award of the tax credit, and   

    if so, the rate at which to award it.   

(2) Before making their decision the Board may by notice -

(a) require the person, or either or both of the persons, by whom the claim is made to provide any information or evidence which the Board consider they may need for making their decision, or   

(b) require any person of a prescribed description to provide any information or evidence of a prescribed description which the Board consider they may need for that purpose, by the date specified in the notice.   

(3) The Board’s power to decide the rate at which to award a tax credit includes power to award it at a nil rate.

In-year challenges are called ‘examinations’ so these cases are pre-award examinations.

When a new claim is received and we have accepted it as valid (see TCTM06102) we have two choices:

  • to make a decision on entitlement under s14(1). This can be to reject the claim because they do not meet the eligibility criteria or if they meet the eligibility criteria we must decide on the amount of the award. Or
  • to ask the claimant or their childcare provider or their employer for information or evidence before making a decision under s14(2).

Some points Compliance staff need to note:

  • S14(2) does not require there to be reasonable grounds for asking for the information or evidence, but as Compliance only look at high risk cases pre-award, by their very nature there are reasonable grounds for thinking there is something wrong with the claim. The information requested must however be reasonable.
  • S14(2(a) relates to the claimant and (b) relates to any person of a prescribed description - childcare providers and employers of the claimant(s). (This content has been withheld because of exemptions in the Freedom of Information Act 2000)