A client receiving WTC and CTC loses their job and are told that they have already received as much CTC as they are entitled to up to claiming benefit. Up to that time the job is lost the threshold used would be 5K, however due to the C of Circs, for the remainder of that year the client would presumably be enitled to the higher threshold of 13K. For the full year a hybrid of the two somewhere between 5 and 13K.

When the new annual figures are inputted for instances like this, is the threshold altered as well?

Assuming that the person claims IS or ibJSA after losing their job, he/she is passported to the maximum rate of CTC (which depends on numbers of children, their disabilities, whether any aged less than one) for the duration of receipt of the benefit.

<p>So there is no applicable taper for CTC, as they are not means-tested for TC purposes during that period.

<p>If the Revenue are claiming that Tax Credit paid already exceeds entitlement then this can be challenged (and appealed) on at least three grounds:

<p>1. Is that actually the case, or have they got their sums wrong?

<p>2. The state of overpayment depends on the assumption that the person will continue on IS/ibJSA for the remainder of the tax year, and so be entitled only to CTC. You could a) question the grounds of this assumption, and b) present evidence rebutting it (the person is actively seeking remunerative work, and so will re-qualify for WTC and a much higher TC entitlement).

<p>The only circumstance in which, it seems to me, the Revenue would be justified in making this assumption is that where the Tax Credits paid already exceeds the <b>maximum possible</b> entitlement for the tax year (i.e. maximum CTC plus maximum WTC).

<p>3. The recovery of payments made in the first period (before losing the job) falls under Regulation 12A of the Tax Credits (Payments by the Board) Regulations 2002, as amended by SI 2004 No.762, so the maximum deduction from the CTC entitlement while on IS/ibJSA is 10%.

<p>Difficult to say much more without knowing the details of the case.

Do you remember how we were told that in the great majority of cases, Tax Credit awards would "flow" with changes of circumstances, so overpayments would not be a major issue...This being so, at the point of arrival of a qualifying benefit under section 7(2), the past would seldom affect the TC during the lifetime of a qualifying benefit award.

As Ferret points out, this can only happen if there is overpaid TC at this point. The new form of Reg 12A of the TC(Payments by the Board) Regs (10%, 25%, or 100% deductions) applies only where a notice has been issued under sub section 4 of section 29 of the TCA. So if no notice has been issued, the IR should not attack the TC whilst the qualifying benefit holds.

Whilst we are on the subject of qualifying benefits, Relevant periods are about periods when the max TC stays the same. Whilst on a qualifying benefit, the max TC can change. So that means you can have more than one relevant period whilst on a qualifying benefit. But who cares, because you get the maximum anyway! Since relevant periods are about keeping the means testing in line when changes happen, would you agree that they do not exist whilst the claimant is on a qualifying benefit?

Waft your way to Step 4 of Regulation 7 (3) of the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002. The formula there tells you to work out the number of days that the appropriate threshold applies, and carry out a pro rating exercise. Enjoy!

Steve

There appears to be a major problem in the 'interface' between TC's (especially CTC) and the benefits system - see previous threads.

Whatever IR say should happen there appears to be no mechanism in place to get max CTC awarded when a person goes from WTC to IB/JSA/PC part way through a tax year. TCA s7(1) should no longer apply and s7(2) should.

We have failed to get IR to award max CTC and like others are assisting claimants with an appeal (even though in most cases there is no writen decision from IR to appeal against!).

Clearly there needs to be a mechanism between DWP and IR to notify when a claimant is awarded a prescribed benefit. IR seem not to act on a notification direct from the claimant.

In my humble opinion the root problem is that there is nothing in the TC act or regs that actually requires or triggers disappliance of the income test .

Given the effect this has on the claimants income (or lack of it) for children something must be done! - Gordon, Andrew respond please!!

Peter,

Surely s7(1) sets out the income test structure (income compared to threshold etc), and s7(2)does the disengaging when there is a qualifying benefit.

Steve