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HMRC internal manual

Tax Credits Technical Manual

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HM Revenue & Customs
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Compliance Examinations: Section 16 - Revised decisions - post award examination

The Tax Credits Act 2002, Section 16

Section 16 gives us the power to revise a decision at any time during the period of the award. In-year challenges are called ‘examinations’ so these cases are post -award examinations:

S16 (1) Where, at any time during the period for which an award of a tax credit is made to a person or persons, the Board have reasonable grounds for believing-

(a) that the rate at which the tax credit has been awarded to him or them for the period differs from the rate at which he is, or they are, entitled to the tax credit for the period, or 

(b) that he has, or they have, ceased to be, or never been, entitled to the tax credit for the period, the Board may decide to amend or terminate the award. 

(2) Where, at any time during the period for which an award of a tax credit is made to a person or persons, the Board believe-

(a) that the rate at which a tax credit has been awarded to him or them for the period may differ from the rate at which he is, or they are, entitled to it for the period, or 

(b) that he or they may have ceased to be, or never been, entitled to the tax credit for the period, the Board may give a notice under subsection (3). 

(3) A notice under this subsection may-

(a) require the person, or either or both of the persons, to whom the tax credit was awarded to provide any information or evidence which the Board consider they may need for considering whether to amend or terminate the award under subsection (1), 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. 

Some points Compliance staff need to note:

  • Where, during the period of the award if we have reasonable grounds for believing the rate of an award is incorrect or they have ceased to be entitled, or have never been entitled - we may amend or terminate the award under s16(1).
  • Where, during the period of the award, we believe the award is incorrect etc - we may ask the claimant or a prescribed person (employer or childcare provider) for information or evidence under s16(2).
  • One key point regarding s16(1) is that the award can only be revised in-year so where further information is needed if it is not received in time to amend the award on or before 5 April then the amendment must be made under Section 18 and included in the finalisation process.

As in s14(2) (see TCTM10120) the opening challenge under s16(2) must be in writing and it will be an informal request but it will always be accompanied by a leaflet WTC/FS2 which tells the claimant why we are checking their award, what will happen next and where to go to for help.