Tax credits and managed migration

If a client migrates to UC under MM and has been underpaid tax credits in the period prior to the UC claim, can they ask that TP be recalculated?

Cl has been in receipt of WTC as self-employed with a disabled worker and thirty hour element. She had to stop work and is in receipt of NS ESA with the support component. The 28 weeks in which she can receive WTC as treated as being in work ends just after her deadline day. She has only just notified TCO that her income has reduced and she is in receipt of NS ESA. It would appear she may have been underpaid tax credits but this will not be rectified before her deadline day.

Almost definitely she will be entitled to less transitional protection if her reduction in income is taken into account. I.e., it is likely to be better (from a TP perspective) for her tax credits award to be based on a higher income at the point of migration.

So it’s in her interests to migrate before her tax credits entitlement is recalculated? I’m assuming she needs to migrate before her WTC ends to maximise TP. She is still in the 28 week period of continued entitlement to WTC at deadline day.

Please can you explain why her TP would be lower Charles?  Is it because I am wrong in thinking her WTC would be higher if her income was lower?

Yes, certainly claim before the WTC ends.

Her WTC entitlement would potentially be higher if her income is lower, but the increased entitlement is usually less than the notional increased entitlement on UC, leading to less TP.

Thank you Charles. So an underpayment or overpayment of tax credits after finalisation would not result in a recalculation of the TP element?

Not normally.

There is provision allowing DWP to recalculate the TP in a case where the information held by HMRC on migration day was inaccurate due to claimant misrepresentation, or a failure to report something which was required to be reported, but that could not normally be used for inaccuracies in current year income, as changes in current year income do not need to be reported in-year to HMRC.
That provision could perhaps be used in a case where a claimant reports to HMRC an estimated income for the year which is clearly inaccurate, and is simply done to maximise TP.

Thanks for replying so quickly, really helpful.