Check your tax credits if you become unemployed

Published on 13 January 2004

LITRG has found that during 2003-04 a number of tax credits claims have been dealt with incorrectly where employment had been followed by unemployment.

The child tax credit rules for people who became unemployed and went on to receive Income Based Job Seekers Allowance or Income Support in 2003-04 were a little obscure. However it is clear that the onus fell upon the Revenue to pay the maximum child tax credit during the period that the individual received these social security benefits, whatever the amount of tax credit they were paid in the rest of the year.

We have found that in a number of situations, the advice and the subsequent actions of the Revenue have been incorrect and the claimants have been denied the appropriate payments. The Revenue now acknowledge that fact and when it was identified to them, they put in place prompt remedial action.

Any underpayments made should be remedied in the Revenue’s final tax credit reconciliation for the year 2003-04.

However, it will be wise for anyone who was in the situation identified above to check very carefully the reconciliation of the final award for the year.

Contact Name: Robin Williamson (Contact tel: 0844 579 6700, Fax: 0844 579 6701)