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Backdating of claims - another tax credits scandal?

Published on 29 November 2009

One of the most welcome features of the tax credit system is the facility to backdate entitlement by up to three months before the claim has been received by HMRC. However, many claimants may be missing out because of a failure by HMRC to operate the rules correctly.

The tax credit legislation makes it clear that a claim for tax credits ‘shall be treated as made’ up to 93 days before the day it is received by HMRC providing the person met the relevant criteria for a claim during that period. Claims involving the disability elements can be backdated for even longer, in certain circumstances.

For some groups of tax credit claimants, HMRC gives this backdating automatically on receipt of the claim. These groups include:

  • families claiming child tax credit only,
  • families claiming both child tax credit and working tax credit, and
  • claimants who come off certain benefits because they have started a new job.

Those with the problem

However, claimants who have no children and who have been in work prior to HMRC receiving their claim do not have their claims backdated automatically.

Instead, HMRC are paying working tax credit only from the date the claim form is received at their office, meaning that these claimants may miss out on up to three months of tax credits (which typically might be worth £500).

The way the backdating regime is operated by HMRC means that those people can only get their claim backdated if they ask for it once their claim has been processed. The law says that HMRC must give backdating whenever appropriate, yet HMRC do not take action to ensure that claimants are receiving what they are due.

According to the latest set of tax credits statistics, people with no children who were claiming WTC only as at 1 April 2009 numbered nearly half a million.

The lack of information

The most natural place to inform a claimant is the claim form, but this is silent on the subject of backdating. The accompanying TC600 notes are similarly silent.

Once a claimant has submitted their claim and received their first award notice, they receive a checklist which enables them to make sure their award is correct. The checklist doesn’t mention backdating.

Some claimants may read one of HMRC’s tax credit leaflets before claiming. WTC 1 gives a brief outline of tax credits and WTC 2 covers the system in more detail. But neither leaflet mentions backdating of initial claims and how claimants go about requesting it, if it is not automatic.

HMRC’s website suggests that only some claims are backdated automatically, but it doesn’t explain who misses out and how those claimants can ensure they receive the backdating. Similar “guidance” is found on the Directgov website.

What should be done?

Firstly it is clear to us that HMRC owe many tax credit claimants a lot of money for backdating payments not made; secondly it is not acceptable to continue with this policy of not telling people of their entitlements.

On the claim form for Pension Credit, a benefit which also allows three months backdating, there is a whole part dedicated to backdating. This is accompanied by a section explaining the backdating rules and how to request it.

Our recommendations are as follows:

  1. HMRC should review all working tax credit claims where no backdating has been given and write to each customer requesting the information necessary to establish whether backdating was due. They should then make appropriate payments which should include interest.
  2. The Notes to the Claim form should be changed from next April (the earliest possible time) and the backdating rules explained prominently and clearly.
  3. The award checklist should include a reference to backdating.
  4. All leaflets in hard copies and on the websites should explain the backdating rules.
  5. From 2011 (the earliest feasible time) the claim form itself should be changed to highlight this entitlement.


The new HMRC Charter states that HMRC will:

Help and support you to get things right

We want to give you as much certainty as we can that you are paying or claiming the right amount.

We will:

  • provide information that helps you understand what you have to do and when you have to do it
  • provide information that clearly explains the taxes, duties, exemptions, allowances, reliefs and tax credits that we are responsible for
  • process the information you give us as quickly and accurately as we can
  • put mistakes right as soon as we can

We suggest that here is an ideal example to show that HMRC mean business.


Contact: John Andrews (0844 579 6700 Fax 0844 579 6701)

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