3. Ms I complains that HMRC refused to consider evidence she provided in January 2020 that proved her children were living with her. She says as a result, HMRC closed her tax credits claim, and she now owes them money.
4. Ms I wants HMRC to accept its errors and write off the arrears.
5. Tax credits are a benefit that gives financial help to people on low incomes. The amount of tax credits an individual receives depends on their total household income. The higher the income, the less is received.
6. HMRC calculates the amount someone receives in tax credits on an annual basis. This amount is based on actual household income from the previous tax year and estimated household income for the current year (provided by the individual). HMRC can sometimes carry out reviews of tax credit awards. If it does this, it can often ask a claimant to provide details about their circumstances. If the claimant does not do this, HMRC can cancel the claim, and the individual may have to pay back the tax credits they received.
7. Ms I had been claiming tax credits since 2013. She received both Working Tax and Child Tax Credits. For 2018/19, Ms I was awarded over £14,000 in tax credits. In May 2019, HMRC selected her claim for a compliance review. It sent her a letter asking for more information so her tax credit entitlement could be confirmed.
8. HMRC asked Ms I to confirm whether two of her children still lived with her and to supply evidence of childcare costs between 6 April 2018 and 10 May 2019. HMRC said that if it did not receive the information by 9 July 2019, it would reduce the award and may ask her to pay back some of her tax credits if it had paid her too much.
9. Ms I says she did not receive the letter so she did not respond.
10. On 9 August 2019, HMRC amended the award so that Ms I was only entitled to around £2,000. It had already paid her over £14,000, so there was a large overpayment. On 12 August, HMRC sent a final award notice to Ms I and provided her with mandatory reconsideration rights (the right for a decision to be looked at again).
11. At the same time, HMRC also reviewed Ms I’s 2019/20 entitlement. It awarded her payment for the year. As it had already paid her more than that, payments stopped.
12. Ms I contacted HMRC as she realised her payments had stopped. In September 2019, Ms I began to claim Universal Credit. But this cannot be claimed at the same time as tax credits. This reduced Ms I’s award further, and as HMRC had already paid her over £5,000 between April and August 2019, there was an overpayment of over £3,000.
13. In November 2019, Ms I requested that HMRC reconsider her 2018/19 overpayment. The time limit had passed, but HMRC put this to one side so Ms I could dispute its decisions.
14. On 2 December 2019, HMRC upheld its original decisions but said it wanted to give Ms I a further opportunity to send more evidence to support the reconsideration of her case. HMRC gave Ms I a list of required documents and said it needed them by 23 December 2019 or it would make a decision based on the evidence it held.
15. HMRC issued a decision on 13 January 2020 to uphold the original decision. The letter told Ms I she could appeal to tribunal if she wanted to take the case further.
16. Ms I phoned HMRC on 20 January and said she had trouble uploading the documents HMRC wanted. She also said she had called the previous week, and an adviser had told her the only documents it needed were childcare invoices but staff could not open the documents in the format she sent.
17. Staff told Ms I her only option, if she didn’t want to accept the decision, was to appeal. She asked to speak to a manager, who said the same thing. They also suggested Ms I send her original documents by recorded delivery to make sure they were received. Ms I asked if she could make a complaint and the manager provided details of where to send her complaint. Ms I did not submit an appeal. She instead made a formal complaint.
18. Ms I now owes HMRC a significant amount of unpaid debt.
21. In cases where a second-tier complaint handler (the next stage in the complaints process), such as the AO, has already considered the complaint, we first consider whether it carried out a fair and thorough investigation. This is to avoid repeating work that had already been carried out robustly.
22. In response to Ms I’s complaint, HMRC said it acted appropriately. It told Ms I it had given her opportunities to disagree with its decision on her claim and that it was now too late to pursue an appeal through the tribunal.
23. The AO said it cannot look at HMRC’s decision to alter Ms I’s tax credit entitlement as this can be appealed through tribunal. But the AO did look at how HMRC communicated with Ms I and whether it prevented her from submitting a mandatory reconsideration and appeal.
24. The AO found that the overpayment for 2018/19 happened because Ms I did not respond to HMRC’s letter asking for information about her claim. HMRC then took the action it described in the letter, which was to amend the tax credit award. The AO added that the 2019/20 overpayment happened because Ms I began to claim Universal Credit, which cannot be claimed at the same time as tax credits.
25. The AO said final award notices for both decisions were sent to Ms I. The mandatory reconsiderations she submitted were sent after the time limit had passed, but HMRC considered these anyway. The AO said that when the decisions remained unchanged, the next step for Ms I to take was to appeal to tribunal. There is no evidence that she submitted an appeal despite HMRC advising her to do so in writing and over the phone. The AO said HMRC did not prevent Ms I from submitting an appeal and it did not refuse to consider evidence. Ms I was now simply too late to dispute the tax credit awards.
26. In this case, Ms I disagrees with the AO report. She has not provided any new information or evidence to dispute it. She is essentially asking us to look at the complaint about HMRC in the same way the AO did (on the basis that HMRC refused to consider the evidence she provided).
27. As the AO explained, HMRC told Ms I in writing and verbally that she would need to submit a tribunal appeal if she wanted to take things further. This was correct and appropriate advice. Ms I did not do this. Instead, she submitted a complaint which is an entirely separate process.
28. We would have expected the AO, in line with our Principles of Good Administration, to properly balance the evidence and consider everything that was relevant to the case. It appears the AO did this as it listened to calls Ms I made to HMRC. It also looked at the letters HMRC issued to Ms I following the tax credit decision. These contained appeal rights. As a result, it was able to reach a robust conclusion about how HMRC acted.
29. Overall, we cannot see that the AO’s investigation was flawed or that HMRC did not give Ms I the required information. It is too late for Ms I to submit an appeal, so there is no further avenue for her to dispute the tax credit awards.
1. The Parliamentary and Health Service Ombudsman has carefully considered Ms I’s complaint about HM Revenue and Customs (HMRC). We have found no signs that anything went wrong. We understand Ms I has experienced difficulty and distress since her tax credits claims ended, and we are sorry to hear about this.
2. Based on the evidence we have seen, the Adjudicator’s Office (AO) thoroughly and fairly investigated Ms I’s complaint when it decided that HMRC did not act incorrectly in its communication of changes to her tax credit entitlement. As we have not seen any new information that would alter that decision, we have decided not to take further action.