TFC50400 | Recovering top-up payments: recovering top-up payments from a tax credit award

Childcare Payments Act 2014, section 52(2)

Where a person is liable for a debt to HMRC under section 35 or 36 of the Act because they received a back-dated award of tax credit as a result of a review or appeal, HMRC may deduct the debt from the tax credit award made to them or their partner (if it is a joint claim). For example, a person is refused tax credit and appeals against that decision. They successfully apply for TFC while the tax credit appeal proceeds. If their tax credit appeal is successful, a debt to HMRC arises because they must repay the top-up payments that they received during the appeal process.

Note: As the repeal of Part 1 of the Tax Credits Act 2002 made by Schedule 14 to the Welfare Reform Act 2012 has fully come into force, section 52 of the Act will generally only apply in circumstances where an award of tax credit is made following a successful appeal.