Tax credit regulation 26 A

I have a client whose child has a longterm disability - previously on DLA, now PIP. Client has transferred to UC and is receiving the correct Disabled Child element in her new award.  However, she never notified the Tax Credit Office about her child’s previous DLA award.  I can see from CPAG that the fact that her Tax credit award has ended would not be a problem, but would the one-month limitation from the date of notification absolutely rule her out of any backdating of this element in her Tax Credits? Are there any possible exceptions?

Hi Ruth

HMRC will say that a backdated award of disabled child element is only possible under s21C of the Tax Credits Act if the claimant reported the award of DLA within one month of being notified – and this does not allow for any extension for good cause.

However, there are good arguments that they should backdate at least for the the current tax year if there was an award for 2024/25, the previous tax year 2023/24 - final decision made after 6 April 2024, and possibly 2022/23 - final decision made by 31 July 2023, so may still be within 13 months for appeal. They could use s19 enquiry powers to revise decisions within one year, or the claimant can appeal.

You can point out that it is HMRC’s practice to take data from the DWP about children in receipt of DLA and update the customer’s CTC awards automatically – as stated in Autumn Statement 2016 p.32 https://assets.publishing.service.gov.uk/media/5a80e284e5274a2e87dbc5d4/Policy_Costings_AS_2016_web_final.pdf

It is still the claimant’s responsibility to inform HMRC that they receive DLA for the child, and caselaw has found HMRC’s failure to check is not an official error. KI v HM Revenue and Customs (TC): [2023] UKUT 212 (AAC).

HMRC have said they would pay from start of current tax year when they receive info via DWP – if they would do this when notified by DWP it seems grossly unfair not to do so when notified by claimant. Also, the final decision for the previous year (and the one before that if still in time) can still be changed for any reason – this is what happened in the above case and in AM v HMRC (TC) [2015] UKUT 0345 (AAC) – HMRC paid current and previous years as explained in paragraph 28. They could do so at their own discretion but if not pursue appeals for each tax year (no requirement for mandatory reconsideration before appeal in tax credits). You can argue that the appeal allows a new decision to be made on facts so DCE should be included.

If it is anything other than highest rate care, this could then lead to a revision of the transitional element to reflect the difference between lower rate disabled child element in CTC and UC.

Mark

Thank you Mark that is really helpful .  Need to read and absorb it butI will have a go for the last two years at least.