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What's new in tax credits?

Category Technical Articles
AuthorTechnical Department
Article by Liz Lathwood, CIOT Personal Taxes Technical Officer. This article appeared in the January 2006 issue of Tax Adviser. This is a purely technical article to update members on various recent changes to tax credits legislation and practice. Liz Lathwood is resisting the temptation to comment on the extent of overpayments in the system, the Ombudsman's report, the qualifications oto HMRC's accounts and so on. She will cover the following issues:
  • technical overpayments
  • civil partnerships
  • notification of young people staying on at, or leaving, school
  • notifying changes of circumstances in-year (including income changes)
  • cessation of PVE - important date for employers
  • suspension of recovery of disputed overpayments
  • backdating
  • paying the nanny in Childcare Vouchers
  • pension contributions post A-day
  • compliance FAQs and 2001/02 settlements
  • reconciliations

In the paragraph "Civil Partnerships", the date by which couples should notify HMRC should read 5 March 2006, not 5 February 2005/6. The paragraph should read:

Because these individuals only experience a change of household composition as a result of a change in the law, rather than any change in their personal circumstances (ie, they were living together before 5 December and continue to live together thereafter), representative bodies have been asking HMRC to waive any penalty that might arise if a couple did not notify this ‘pseudo-change’ before 5 March 2006. HMRC indicate that they are likely to do this, but there remains the problem of the backdating of the new joint claim. Even if the technical overpayment relief described above is applied to these cases, there may still be a balance of overpayment to be repaid if, say, the couple do not notify their pseudo-change of circumstances until renewal time in, say, June 2006. At present, therefore, couples in this situation would be well advised to notify by 5 March 2006."

Technical Department
020 7235 9381

January 2006 by Liz Lathwood


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