E2.257 Tax credits—overpayments and underpayments

Personal and employment tax

E2.257 Tax credits—overpayments and underpayments

E2.257 Tax credits—overpayments and underpayments

HMRC issued a briefing in February 2014 on tax credits overpayments1. The briefing covers how overpayments occur, how they can be avoided and HMRC's actions on overpayments. It emphasizes that recipients of tax credits must renew their applications on time, check their award notices and advise HMRC within a month of any omissions, errors or anything incomplete. Any payment made into a claimant's bank account that does not match the amount on the award notice must be notified to HMRC as soon as possible. The briefing indicated that HMRC may double-check the information provided in a claim, to ensure the correct amount of tax credits is paid. In this situation, HMRC will write to the claimant and request that they supply evidence in support of the claim details, normally within 30 days.

Where the amount of a tax credit paid for a tax year exceeds the entitlement of the claimant(s) as determined in accordance with TCA 2002, ss 18–21B, HMRC may decide that the excess or a part of it is to be repaid to HMRC. The excess is referred to as an overpayment2.

An overpayment on a single claim is to be repaid by the person to whom the credit was awarded. In the case of awards made on joint claims, the persons to whom the tax credit was awarded are jointly and severally liable to make any repayment, unless HMRC decide that each is to repay a specified part of the overpayment3.

HMRC may decide to

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