I am looking for some advice on a case i have been referred. Situation is my client is a british citizen with children from a previous marriage. After this broke up she had a single claim for tax credits. She states she got together with her present husband in 12/03 and they were married in 07/04(islamic marriage). Her husband initially entered the uk in 2000 on a visiting visa from pakistan and never went back. As far as i can gather he has been working on the side. HM and customs carried out an enquiry and have issued a decision stating that my client is not entitled to tax credits for 03/04,04/05 and 05/06 and that she has an overpayment amounting to £24000 (including a penalty and interest). the reason given for the overpayment is that they were living together as a couple for tax credits purposes and failed to disclose this material fact.

They have asked for her husbands income details to offset any awards they would have received for the 3 years had they claimed as a couple. My client does accept liability as she didnt disclose her husbands details to them but disagrees with the time period as the overpayment is from 04/03 and she states they became a couple in 12/03.

I have been told that she should still be eligible for tax credits as a british citizen but im not sure how they would calculate this? Would they still take his income into account?

I originally thought that she would be liable for most of the overpayment as her husband has no recourse to public funds so wouldnt be entitled to claim but im not so sure now!

Any help would be greatly appreciated as im stuck!

thanks

Check the Tax Credit Immigration Regs. I think you will find there that they would have a valid couple claim from the date they got together, even though he has "no recourse". If this is so, then logically his income should be taken into account in assessing entitlement. But you may have a problem agreeing income with TCO if he has been working on the side and has no records (presumably there are income tax and NI contribution implications as well?).
I believe TCO should set off against the £24K the assessment of what the couple would have got if they had claimed correctly.
If they are still entitled to TCs as a couple then the overpayment recovery procedure in COP26 comes into play, and there is a limit on the amount their ongoing TCs can be reduced.
The husband needs to apply for a NI No. if he doesn't have one.

thanks for ur help. i am going to try the appeal route but there is a problem with the husband working on the side as tax credits are aware of this. They have stated they are willing to offset any award due for the overpayment period if he provides confirmation of his income. He doesnt want to do this as he thinks it will implicate his friends are u aware of what these implications could be or where i could find more info on this?

I dont think he can apply for an ni no as when he tries im sure they check his status?

saima

1. The implications for his friends depend very much on what was happening:-
a) If he was employed then the friend(s?) as employer should have deducted tax & NI and could probably have penalties imposed by In. Rev. or maybe even be prosecuted. There would also be problems for anyone else they employed on the same basis.
b) If he was self-employed and working with others who were doing the same then each of them should have declared their own tax & paid self-employed NI.
c) If he was working in the construction industry other regulations might also apply.

You should be able to find some info about this on the relevant parts of the HMRC website.

Whatever he was doing, it seems unlikely that TCO/In. Rev. would accept his info on income without investigating the surrounding circumstances. He could then be clobbered for tax/NI himself and so could the friends. Is his status simply "no recourse" or is he also prevented from working? If the latter he has more serious problems as he could possibly be deported.

2. I'm not up to date on the NINO situation but my understanding is that if his status is simply "no recourse" and he needs a NINO in order for a TC claim to go through then one should be allocated. Investigating his status in this case should not cause a problem as a joint TC claim in these circumstances does not break the "no recourse" rule. This was the situation on a case I dealt with about 12 months ago.

I meant to add:

3. I'm not at all sure an appeal will get anywhere. However, even if the £24K has to be accepted a joint claim now, assuming they are still entitled, would appear to limit recovery to the basis in COP26 i.e. 25% of entitlement or the whole amount if they are on only the family element of CTC (£545 pa). The trouble with this, of course, is that its a yoke round their neck for many years into the future.

yeah i thought as much, they are in a difficult situation and probably not worth appeal due to the can of worms it would open up for the husband and his friends.

thanks for your advice.

Looking at your original post again they could have an argument for the 4/03 to 12/03 period. What evidence has the client got to back up the 12/03 date for start of cohabiting? What basis have TCO used to come up with 4/03? - they should be able to back this up with evidence, otherwise they shouldn't be using that date.