can anyone tell me, if a person doesn't return an annual declaration (not received)and tax credits stop partway through the year, the legal authority for treating the tax credits paid in the year, as overpaid?

thanx

sorry, scrub that question (wrong tax year, damn notices.) to be more specific, because i'm section 17 and 18-ed out, does anyone know which section or sub-section is interpreted by HMRC as authority to deem a a person not entitled in the previous tax year?

Sorry JJ, I don't know.

Struggled with this one myself. The ss of the act and the regs are quite contradictory.

s.17 seems to say both that claimants can choose not to reply to the annual declaration (subs 2), and that they must (subs 5 and 7). It's all pretty jargony though for a non-qualified mind so I'm just guessing really, but I think that for past years a declaration need not be made, but for CY claims to continue, it must be made. Reg 34 CT(C&N) regs says that a declaration MUST be made in response to a s.17 notice, but doesn't say what happens if it isn't. If that's right, then CY claims are overpaid from April to whenever the final decision is given becuase there is no valid claim if the claimant doesn't reply to the annual declaration.

It might be that they are relying on s.16 which gives the power to terminate an award with reasonable grounds for believing it might not be correct.

I might be way of the mark here, but it's best I can come up with while munching my BMT from Sub!

Yes I think it's S.16 as well because I can't see any other power to terminate CY claims. Fortunately appealable. In a case I'm dealing with the Annual Declaration was returned in time but the box was checked that a change of circumstance needed to be reported. It was reported by letter accompanying the Declaration. HMRC ignored this and decided six months later that the whole year's CTC was overpaid since there was a change that hadn't been reported.

I've been trying to clear this up for 15 months now. Since we have an appealable decison (although HMRC deny this, without referring to any legislation) and an appeal was made I have just referred it to the TS Regional Chair asking for a Direction that HMRC provide a submission. I will post again iof this results in any clarification.

Richard Atkinson

thanks guys - i had a lot of trouble with this - client came to us at a late stage, and i spent much of my weekend pulling together my patented chewing gum and string court defence - i was quite pleased with it in the end, with printed extracts of the treasury committee report etc...: ) saw client on Monday, whereupon she decided she couldn't face the stress of fighting it... this involving an adjournment request...that'll teach me...: ) gotta love'em...she seemed very depressed...

i got into a muddle with the years - hadn't spotted when i made both posts, that the (Revenue's) claim was for 05/06, and the statement of liabilities was for the same 1200 + quid, but said it was 2004/05 - this was issued in Jan 07, which led me astray until i realized the SoL date was an error - so it was a current year o/p. sorry about that - my first post was right... : (

basic scenario was this - iraqi client, speaks only a little English, can't read or write English at all, one child, started work 16 hours in March 2005 - went to LA neighbourhood office to report change - they notified jobcentre for her and IS stopped - she believed they also notified HMRC - but they evidently didn't - otherwise she would have been asked for earnings information and, as she is low paid, would have qualified for WTC - she does not know anything about WTC. next, in October 05 she received a letter from HMRC - they are stopping her CTC because she didn't return annual declaration. it tells her what to do if she thinks she is still entitled to CTC, but doesn't ask her to do anything. on the reverse, some award info including TC overpayment -"we will write to you separately about it". also sent a final award notice for 2005/05 - entitlement same as amount actually paid so no problem with that.
she gets a friend to translate it, and since she had not receieved the annual dec - got friend to write a letter to that effect - could not face telephoning with her broken English.

stopping of payments almost coincided with child leaving FTE - assumed HMRC know since they pay ChB which stopped in September - believed this was the reason payments stopped, not understanding the meaning of the letter about annual declaration, so she did not seek reinstatement of payments.

heard nothing in response to her letter of October 2005 until Dec 2006 - demand from Cumbernauld... was confused and phoned, then wrote for clarification - county court proceedings started late January 2007, and nil award notice issued for April - Oct 2005.

She has lost out on entitlement to WTC from March 2005 to date, and has to repay 6 months CTC, when entitlement -wise, she was only overpaid 2 months CTC...

this is not a system which is fit for its purpose...and the treasury is profitting from complexities HMRC has built into the system - the most vulnerable and least able are hit the hardest by the penalties for failure to navigate the claim complexities - tackling child poverty and social injustice? somebody's havin' a larf...but we all know this...

this afternoon saw another client - also doesn't speak English - had spotted reference in July 07 award notice to an overpayment which is being recovered - had not spotted it on earlier notifications - it's £4,000 +.
i phoned helpline...

o/p is from 2003/04 - it's a duplicate payment case - o/p occurred on 15/7/04 when the computer paid 03/04 entitlement and arrears in a lump sum, and manual payments had been made throughout previous year.
they notified her on 12/7/04 that she had been overpaid, and they would start to recover the overpayment through (a surprisingly small) deduction from ongoing entitlement. yes- they notified her of the overpayment and recovery arrangements 3 days before they actually overpaid her... i had a very,,,erm,,strange conversation on that point, with the nice lady who genuinely couldn't see what is obvious to anybody outside of HMRC world...worrying...

none of the info i relayed to client rang a bell with her - admittedly she has had a very stressfull few years - eldest son was on a life support machine for two weeks in 04 following a serious RTA involving a couple of buses, and then her youngest boy developed leukemia...i've sent her off to get bank statements so that we can check HMRC's version...have warned her little chance of write off, which she is ok with, but first we want to check that she actually received duplicate payments - point really being about stealth overpayment notices, and the significant differential in perceptions of reality between HMRC and regular folks...

am thinking that HMRC can afford to be cavalier with their their demands for dosh, having had major imput in drafting of legislation, successfully and calculatedly excluded overpayment appeal rights and external checks and balances, have carte blanche near as dammit on interpretation of the law (section 18 (11)- do what!) and retaining historic and customary above the law tax collecting powers, with outstanding obfuscation skills.

and now the ministry vets have come for Shambo!! : ( : (

Tax credits! It's all a load of bullocks!!

Just been looking at this (for after end of tax year) and it seems to me that s 17 has two posibilities. One is sending a notice asking for a declaration and the other sending a notice asking for a declaration only if the circumstances are not as specified in the notice. s 18 then says the Board must decide whether the claimant(s) were entitled to TC and if so how much. subs (2) and (3) together say that the Board have to make this decision either after they get the declaration or if they don't get a declaration after the deadline has passed. So I suppose the "not entitled to TCs for the past year because you didn't return the declaration" must actually be a decision that the claimant is not entitled, possibly by drawing adverse inferences? If this is right I wonder what a tribunal can consider: do they just have to decide whether someone was entitled, effectively giving a second chance if you don't get the declaration back? I can't see why not. Alternatively can a tribunal decide whether the Board were entitled to draw adverse inferences?

The experience of the couple of people in the office at the moment is that not declaring always leads to finalising without a declaration, but with so few cases that you couldn't make much of it. Has anyone ever come accross them using the powers in s32(1)(b) and (2) to impose a penalty of £300 then £60 per day thereafter to force someone to do the declaration?

A little extra bit I forgot. reg 34 in the Claims and Notications Regs has 'must' in it but I think it just says what a declaration 'must' be like if there is one rather than that there 'must' be one with the way it is worded and the heading of the reg "Manner in which declaration or statement in response to a nitic under section 17 of the Act to be made". Funny really that Part V of them regs is titled "Final Decision" but it is all about s17 and not a word about s18.

Funny strange not funny haha.

Had a bit of a look at s16. The power to 'terminate' must be a power to bring the award to an end just like in benefits but without deciding that what was awarded earlier was wrong, terminate meaning 'bring to an end'. The power to 'ammend' may give rise to an overpayment but it seems to me that making an assumption of no entitlement without anything to indicate either way does not appear reasonable, especially with powers to force people to spill the beans. The bit that has struck me most about the wording is the opening line "Where, at any time during the period for which an award of a tax credit is made". So the power to terminate or ammend is only there during the period of an award whereas the period of the award is gone and they are actually getting payments outside of the period of the award (the power for which is in s24(4)).

So is the whole stopping payments and making them be paid back for failure to return the declaration ultra vires?

I'd be interested in anyones views on this before I start to use it in grounds for appeal.

Proving that I could start an argument in an empty room I will now point out why I am wrong in the above.

The payments in the new tax year are payments after the award period which the revenue can make under the powers provided for in s24(4)and it is a discretionary power. If no declaration is returned they simply exercise the discretion not to continue to make payments. There is no claim for the new year so any payments are overpayments and so get recovered.