Tax credit claimants advised to check their renewal paperwork

With HMRC writing to tax credit claimants after omitting important income figures from their renewal notices, the LITRG is advising that people check their paperwork carefully.

It’s also urging HMRC to use the full extent of their powers to correct any issues that may arise later due to this glitch.

If tax credit claimants don’t let HMRC know by 31^st July that the figure they hold is wrong or just an estimate at this stage, they risk either receiving less tax credits than they are entitled to, or receiving too much, which will be taken back, perhaps, unexpectedly, from any ongoing tax credit payments.

This current situation is due to HMRC now automatically renewing most tax credit claims this year in light of pandemic.

Automatic renewal means that HMRC state the claimant’s circumstances on a renewal notice and the claimant only needs to contact HMRC if the income shown or circumstances detailed are wrong. Otherwise, HMRC will finalise entitlement for 2019/20 and put in place a claim for 2020/21 on 31^st July (or shortly after).

LITRG’s understanding is that this issue affects claimants who have income that HMRC do not know about such as:

• Self-employed claimants
• Those who receive taxable social security benefits
• Those with other types of income such as rental income from property.

To auto-renew these cases, HMRC have used the last income figure they have on record in their calculations, but these figures do not appear on the actual notice.

Victoria Todd, Head of LITRG, explained further, “HMRC’s glitch, along with the fact that the renewals process looks different for many people this year, means that it is crucial that claimants check their renewals paperwork very carefully.

“Auto-renewal can be helpful for claimants with more straightforward circumstances where HMRC have earnings or pension information from the tax system. Although we understand why HMRC tried to move more claimants into the auto-renewals process this year, in many cases HMRC do not have enough up to date information about a household’s income to finalise their entitlement accurately. In normal times, that would have been regarded as an unsuitable approach. That is why those people must usually fill in a declaration form (either on paper or online) to confirm their income for the year just ended.

“Claimants who receive an auto-renewal notice are told to check the income figure that HMRC say they will use to finalise entitlement for 2019/20 and set the claim for 2020/21. Unfortunately, HMRC now understand that in around one million cases, the notices do not actually include the income figure that HMRC have used in calculating the award that the claimant can check.”

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