In view of reported pressures on the helpline this year, LITRG are asking that HMRC put back the date on which they start to close down claims to allow all those who wish to renew in an orderly fashion to do so.
Why is it important to renew a tax credits claim?
The renewals process is fundamental to the operation of the tax credits system. Tax credits are paid throughout a tax year on a provisional basis: that is to say, a person’s entitlement tracks changes in their circumstances during the year of payment, so it is not until after the year has ended that their final entitlement can be ascertained, with final income figures for the year.
Therefore, completing and promptly returning the renewal forms (comprising the TC603R and TC603D) is vital not only to renew one’s claim for 2008/09, but also to finalise tax credits entitlement for the year just ended (2007-2008).
The forms can also be completed over the phone via the tax credits helpline.
Problems caused by failure to renew
Failure to renew can lead to real difficulties for claimants, for these reasons.
- Whilst the renewals process is taking place between April and July, HMRC make run-on payments based on the claimant’s last known income and circumstances. But these payments are provisional on the claimant completing and returning the renewal forms. Therefore, if no renewals forms are submitted, HMRC will later try to recover those provisional payments as overpayments.
- The provisional payments will stop.
- In addition, the previous year (2007-2008) will be finalised using information held which could be out of date.
It is also extremely unwise not to complete the renewal forms in an effort to stop receiving tax credits, as several hundred thousand claimants are believed to have done last year. Even if you are disillusioned with the system and no longer wish to receive tax credits, you must complete the renewal forms in order to finalise your claim for the year just gone. Then inform HMRC about whatever change it is that leads you to think tax credits are no longer due.
Problems caused by renewing late
Those who are late in renewing should not give up entirely. Once the deadline has passed, HMRC will generally terminate the claim and issue a Statement of Account. But so long as a claimant contacts HMRC within 30 days of the date shown on that document, the claim should be restored.
Outside this 30-day period, the claim can only be restored if there was ‘good cause’ for failure to renew (e.g. flooding in the house, death of a relative etc), and renewal papers are returned by 31 January 2009.
But deferring is not a sensible strategy and getting claims reinstated can sometimes be a nightmare.
Claimants who have claimed more than once during 2007/08
The burden at renewals time is increased for those claimants who have more than one claim during a tax year.
For example, imagine you are part of a joint claim with your partner, the two of you separate and you make a new single claim, all within 2007/2008 tax year. You will receive two sets of renewal forms: one for when you were claiming jointly with your former partner, one for when you were claiming by yourself. Those two sets of forms must both be completed, even though they each require the same information.
This extra burden is not made clear to claimants by HMRC.
HMRC under pressure
It is a time of considerable pressure for both HMRC and claimants. Reportedly, HMRC tax credit staff have been asked to defer their holidays so as to help cope with the renewal surge. We are not surprised, as we and others are experiencing lengthy delays in getting through to an adviser on the tax credit helpline.
Those people who had planned to renew by telephone (and many did because the deadline has been brought forward) are now being put to significant worry. It can also be particularly costly for mobile phone users due to HMRC’s use of an 0845 number.
In the circumstances of this year LITRG are asking that HMRC put back the date on which they start to close down claims to allow all those who wish to renew in an orderly fashion to do so. This sympathetic approach will alleviate some of the pressures on claimants and HMRC staff.
Renewal forms ‘not received’ by HMRC
We have also seen how many forms just ‘go missing’, even when sent by recorded delivery. This can result in an overpayment for alleged failure to renew.
If you have submitted your renewal documents close to the deadline and you are still worried, then you should ring the helpline to record the fact that they have been sent. Make sure that you note down the name of the adviser, date and time of call. You could make a telephone renewal as well.
Sending your postal renewal by a method which gives some proof of posting is a good thing, because proof of posting allows HMRC to treat the renewal as made even if the forms have gone astray. See our earlier article which links to HMRC’s stated practice in their manuals.
Contact: Robin Williamson (Tel: 0844 579 6700 Fax 0844 579 6701)