Tax credits confusion

[stunner1901]

Morning all

my son and daughter in law have a problem help needed!!!

thet live as a family between both parents houses spending on average 5 nights with us and 2 with her mums house

my son is on long term sick following a leg reconstruction and claims ESA as a couple but we have found out that his partner has been claiming tax credits as a single person

She received a letter threatening stopping credits and when she phoned them they have said they are not a couple and my son should not be claiming thus.

they live as a couple and are awaiting housing so surely they should claim as a couple. Can someone advise please?

thanks in advance

[des8]

Re: Tax credits confusion

If they live together as a family, they are a couple as far as DWP are concerned.
The real problem is the Tax Credit claim as a single person and not a joint claim.

You might find this link useful (even perhaps scary) http://revenuebenefits.org.uk/tax-cr...ving-together/

[Kati]

Re: Tax credits confusion

How long has she been claiming as a single person?

[Kati]

Re: Tax credits confusion

they might be able to apply for a notional offset of the overpayment (quote from Des8's link)

Notional Offsetting

Sometimes, tax credit claimants who form a couple or who become single, either because they separate or because one partner dies, are slow in reporting the change to HMRC or have been mistaken about the need to report such a change. Yet in many cases, if they had acted promptly they would have continued to be entitled to tax credits, albeit in a different capacity.

Until 18 January 2010, HMRC would recover the whole of any overpayment arising on the old claim, but give no credit for what the claimant would have received had they made a new claim at the right time.

From 18 January 2010, HMRC introduced a new policy whereby tax credits recipients who start to live together, or who become single after being part of a couple, but are late reporting the change to HMRC, can reduce the overpayment on their old claim by whatever they would have been entitled to had they made a new claim promptly.

This new policy applies to overpayments arising from 18 January 2010, but also to overpayments that were still outstanding as of that date. So, if an overpayment has been repaid in full prior to 18 January 2010, the new policy will not apply. However, if any part of it remains unpaid, offsetting can be applied to it.

To request notional offsetting, claimants should contact the tax credit helpline to ask for their case to be referred to the ‘notional offsetting (or notional entitlement)’ team in the Tax Credit Office. If no action is taken, a letter should be sent to CSSG, Tax Credit Office, Preston, PR1 4AT.

Note that the notional offsetting will not cover the one month (previously three months) by which the claimant will be able to backdate their new claim. Normally HMRC will grant the one month backdating automatically, but if that doesn’t happen, the claimant will need to ask for it.

On the whole HMRC policy is to be lenient and not charge a penalty where the failure to report has resulted from a mistake or misunderstanding. If HMRC think the claimant has been negligent in not reporting, and there is a net overpayment even after notional offsetting has been applied, the claimant may be charged a penalty against which there is a right of appeal.

If the failure to report is dishonest (considered by HMRC to be deliberate error), the penalty may well be substantial and in such cases notional offsetting will not be given. A list of what constitutes deliberate error is available in the HMRC compliance manual (CCM10750). The CCM also contains some examples of deliberate error (CCM10755). It is important that advisers challenge any cases where HMRC have classified the case as deliberate error on the basis that they have retrospectively decided, using credit reference data, that the claimant should have made a couple rather than single claim. Unless there is clear evidence that the claimant acted deliberately, then advisers should challenge the decision not to apply notional offsetting particularly if no penalty has been charged.

More information about notional offsetting can be found in the HMRC compliance manual. The manual covers three distinct periods, prior to 17 May 2007, between 17 May 2007 and 18 January 2010 and after 18 January 2010. This is because notional offsetting applied until May 2007 when it was withdrawn. It was reinstated in January 2010 following representations from LITRG and other organisations.

[stunner1901]

Re: Tax credits confusion

If they live together as a family, they are a couple as far as DWP are concerned.
The real problem is the Tax Credit claim as a single person and not a joint claim.

You might find this link useful (even perhaps scary) http://revenuebenefits.org.uk/tax-cr...ving-together/

Thanks for the info

within the link above is the following quote

"It is also worth noting that although the living together test has its origins in the social security system, it is slightly different in that there is no requirement in tax credits that the couple need be part of the same household."

the HMRC have said that as they have a couple of days apart each week that they are not a couple

my interpretation of the above quote is that they can live apart and still claim. Am I correct?

regards



- - - Updated - - -

Not sure Kati

maybe 6 months!!

Im really annoyed because we have done a lot to help but some people don't listen

regards

[Openlaw15]

Re: Tax credits confusion

Thanks for the info

within the link above is the following quote

"It is also worth noting that although the living together test has its origins in the social security system, it is slightly different in that there is no requirement in tax credits that the couple need be part of the same household."

the HMRC have said that as they have a couple of days apart each week that they are not a couple

my interpretation of the above quote is that they can live apart and still claim. Am I correct?

regards



- - - Updated - - -

Not sure maybe 6 months!!

Im really annoyed because we have done a lot to help but some people don't listen

regards

Post this please, HMRC Tax Manuals define Couple in Glossary under C as:

'A man and woman:
1) who are married; or 2) living together as though married.

Your facts: living together as though married in your parent's home. Ie you normally have normal couple's relations..hmm sleep in the same bed.. or have sex in your parent's home as though you were a married couple but not married by a piece of paper.

http://www.hmrc.gov.uk/manuals/tcmanual/tcm0320080.htm

[des8]

Re: Tax credits confusion

From your first post I thought they both moved to her parents house>

HMRC say two days apart is sufficient to be classed as single, but I think DWP take a different view.
More than one or two sleep overs a week and you are a couple!

How one reconciles the different view points of different departments of the government I'm sorry, but I haven't a clue.

[Amethyst]

Re: Tax credits confusion

They live together and share finances ?? etc regardless of where they live ( your house, their own house etc) so they should be making a joint tax credits claim. Bit daft for one to say they are a couple ( for the ESA ) and one to say they aren't ( for the tax credits ) - it's just going to raise questions.

DWP don't do the mythical 4 nights sleep overs etc. It is based on reality and you could live in different houses and be deemed a couple if you have things at each others house and share finances in any way.

As Des8 said earlier, the main issue will be the single claim for tax credits so she needs to get that sorted asap. She may have to come to an arrangement to repay the overpaid tax credits - if your son is on ESA and not working then it shouldn't be too bad. There may be an issue with the length of time, Kati mentioned the offsetting where it was due to a mistake. I don't know how she has explained the circumstances to the Tax Credits people but seems like a little bit of buck passing is going on.