Provisional Tax Credit awards from April

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  • #20025
    Anonymous
    Guest

    Hi

    Is there any local authority out there that does not take into account provisonal awards and just leave it on the old rates until a new amended Tax Credit award letter is received.

    I’ve been asked to draft a general letter to customers explaining why we do not take into account provisional awards of Tax Credits on their HB and CTB claims. Would any of you have an example of a letter your authority uses to explain this to your customers?

    Personally i think it is daft we don’t take into account provisonal awards of Tax Credits. Do any of you have any thought on this?

    Mustafa (Leeds)

    #1797
    Andreas
    Participant

    Can’t you just check CIS and use the figures shown there?

    #1798
    Anonymous
    Guest

    I think you misunderstood my question. What I am saying is that our authority don’t take into account provisional awards of Tax Credits in HB/CTB claims from the beginning of each financial year (i.e. April 2009).

    We don’t amend claims until later when the customer’s proviisonal awards change to normal awards (yes we do use figures from CIS or customer’s award letter, whichever comes first but that is irrelevant to my question).

    What I am asking is what do you think of our council’s policy to not use the provisional awards in HB/CTB claims?

    #1799
    Andreas
    Participant

    Sorry, I did misunderstand what you meant.

    In my LA we do advise staff to use the provisional figures for the following year (especially if the increase and would otherwise lead to an overpayment).

    My understanding is that the provisional amounts are the actual amounts paid until HMRC make the final decision, at which point, further payments will be adjusted to reflect any under or overpayments (i.e. the actual amounts paid won’t change until the final decision is made).

    I’m not sure what other LAs do but, but if your LA chooses not to use the provisional amounts do they at least consider any overpayments that may be created as unrecoverable (as they claimant can’t have known at the time of payment that they are being overpaid)?

    #1800
    Anonymous
    Guest

    Thanks for your reply – no need to apologise. I have to say I agree with your LA’s procedure to use the provisional awards because at the end of the day, they are the actual income they are getting in the relevant benefit weeks until a final decision is made later on.

    In regards to your last paragraph, I’m not entirely sure what you mean as I’ve not come across any cases where we would consider any overpayment to be not recoverable. I guess that you are thinking that once the final decision is made then my LA would go back to beginning of April and amend it, which could create an underpayment or overpayment, but we would not do that.

    We would simply just leave the Tax Credit awards based on last financial year’s rates until the final deciison is made later on (usually in May, June, etc.). And then simply just amend on to new rates around the same time the final decision was made.

    #1801
    Andreas
    Participant

    Yes. I was thinking that you were going back and amending the figures.

    Based on what you’ve said, from the claimant’s point of view, I can’t really see a problem (in terms of the outcome) in what your LA is doing.

    However, I do recommend checking with your auditors that they are happy for you not to use the provisional figures for the particular periods they cover.

    #1802
    cfowkes
    Participant

    Since the change in the regulations from using awards of tax credits to uisng actual instalment amounts we use the provisional amounts in the assessment.

    The amounts in April can also change due to overpayment recovery ending.

    #1803
    Anonymous
    Guest

    I agree that we should use provisional amounts and I will advise my LA. A claimant may disagree with our LA’s policy not to include provisional amounts of tax credits from April if they are now being paid less then the rates being paid up to end of previous financial year

    #1804
    Anonymous
    Guest

    I have looked into this further and HB reg 34(e) allows LAs to disregard legislative changes in Tax Credits for a maximum of 30 weeks (I assume this is refering to April’s provisional payments). But it doesn’t say they have to follow this rule.

    But in order to allow maximum HB and CTB then I will recommend to my LA that we consider the provisional amounts if they will be better off

    #1805
    cfowkes
    Participant

    I am not sure if reg 34e does kick in in these cases and would welcome the opinion of others. This regulations says we may disregard any legislative change in the maximum rate of tax credit. The provisional rates are not due to any legislative change. They are due to the previous year award being apportioned over the new financial year and other changes such as the end of overpayment recovery or known about income changes. The legislation changes that increase the personal alowances in the tax credit calculation are not applied until the tax credit claim is reviewed.

    As an add on, I would be interested if any LA do discount any increase in tax credits once they have been renewed for 30 weeks?

    Thanks

    Clare

    #1806
    Anonymous
    Guest

    You may be right, but not sure if this clarifies anything:

    See Paragraph 13.47 in Zeb and Ward Guide to HB and CTB 2008-09 (p224).

    “Legislative changes in the amount of WTC/CTC (such as April up-rating) may be disregarded for up to 30 weeks.”

    Does the term “such as April up-rating” refer to provisional amounts?

    #1807
    cfowkes
    Participant

    I don’t think it can, the April uprating is when the new year elements in the Tax Credit calculation are applied, this is when the new award is decided after renewal. The payment changes in April that are marked as provisional are not due to uprating.

    #1808
    Anonymous
    Guest

    I suppose what you say does make sense and sounds right.

    Anyway thanks for your input and I will discuss with the people at my LA

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