Your Right to a Tax Credit Appeal: What’s the process?

In a recent article, we gave a step-by-step guide to what happens when a benefit fraud investigation letter lands on your doormat. We mentioned then about the possibility of appealing a tax credit decision, and today we’d like to explain this in a little more detail.

Benefit fraud and tax credit law can be difficult topics to understand, as the rules seem to constantly change. We at Hylton-Potts prefer to strip back the complicated language and leave you with the facts, but of course, if you find any of the following information confusing, please don’t hesitate to give us a call.

What decisions can I appeal?

There are many different decisions regarding tax credits, and it’s important to note the ones that can and cannot be appealed against. Decisions that can be appealed are as follows:

  • Decisions based on how your tax credits have been worked out, and the amount of tax credits you have been awarded
  • A decision to charge interest on an overpayment
  • Decisions to charge a penalty
  • Decisions to undertake an enquiry (where you can appeal to bring the process to an end)

Decisions which cannot be appealed are as follows:

  • A decision that you must repay an overpayment (where the overpayment is correct and you have been paid more than your actual entitlement)
  • A decision regarding the rate of recovery
  • A decision regarding how your tax credits are paid to you
  • A decision that your claim is incomplete

It’s important to note here that, in cases where you have been overpaid and have received more than you are entitled to, you cannot appeal against the decision to recover the overpayment. However, if you feel that the overpayment was caused by a mistake made on the part of HMRC, and you met your responsibilities, you can ‘dispute’ it.

How does the appeal process work?

As of 6th April 2014, all claimants who wish to put in an appeal must ask for ‘mandatory reconsideration’ first. This is where you must ask the HMRC for a review of the decision before you can appeal to an independent tribunal, and you can do this by telephone or in writing using form WTC/AP. If in writing, you can require proof of postage and so forth, but your legal consultant will be able to advise you on what is best.

Once you formally appeal, you’ll encounter the First-tier Tribunal (Social Entitlement Chamber), where the appeal is heard and decided upon by a judge, although the procedure should be less formal than a court.

You must appeal within 30 days of the date on the tax credits decision notice, but late appeals are considered if they are made within 13 months from the date on the award notice. You must also include an explanation as to why the appeal is late; if HMRC object to your appeal because it’s late, there’s no right of appeal against this decision.

HMRC will only accept a late request if they are satisfied that, due to special circumstances, it was not practical for your request to be within the 30-day time limit, and an extension is a reasonable request.

It’s also worth noting here that there may be times when the decision has been made about a joint claim regarding you and your partner; if this is the case, either one of you can make the appeal. If just one partner appeals, the other still has the right to attend the tribunal hearing, and should also be sent copies of the appeal papers.

What can the HMRC do?

While you’re going through the appeals process, you may be wondering where the HMRC is in all of this. Sometimes they may write to you asking for further information, stating that they won’t change their decision unless you can send additional evidence. It may be the case that they ask you to indicate whether you want to withdraw your mandatory reconsideration request or send the additional evidence.

The letter never mentions the third option, which is to allow the mandatory reconsideration to continue. If you should get this letter, it’s vital that you seek advice before making any moves to withdraw your mandatory reconsideration request. Once they’ve been provided with the information they need, the HMRC will then make a mandatory reconsideration decision. Unfortunately, there’s no time limit in place for this other than to do it “as soon as reasonably practicable”.

Their decision will either be that the original decision stands (in other words, they refuse your request), that they change the original decision, or they cancel the original decision. In any case, you’ll receive a notification letter explaining the decision.

The notification letter should also thoroughly explain what to do if you’re unhappy with HMRC’s decision. Again, you will have one calendar month to send your appeal to the Tribunals service, and if you’re outside the time limit, you must give reasons why.

This is where you may get confused, as under the old process, it was the HMRC who would send the case to Tribunal. However, the new system dictates that you are responsible for sending the appeal to the Tribunal service, by what’s called ‘direct lodgement’. You can send your appeal to the Tribunal using form SSCS5 and including a copy of the mandatory reconsideration notice that you received from HMRC.

What happens to my debt while this is happening?

By now, you’re probably wondering at what point during all these processes that you had to start paying back any overpayment to HMRC. Don’t panic though; as soon as you submit your mandatory reconsideration request, the HMRC should suspend any recovery of the debt, which is again why it is so important to get this sent off as quickly as possible. Only if you settle your appeal, withdraw your appeal or your appeal is heard by a Tribunal, will the debt start being recovered again. Simply put, until the appeal process is complete, you shouldn’t have anything to fear.

However, if you are disputing, rather than appealing, the HMRC will not suspend your recovery payments, and you’ll need to make financial arrangements. As we mentioned above, disputes occur when you feel the HMRC have made a mistake in their calculations.

In cases where the Tax Credit Office admits to having made a mistake and agrees to simply correct it and change the decision in your favour (known as ‘official error’), you may not even need to formally appeal. In such circumstances, disputes can be made up to five years from the date when the decision was made, providing you didn’t materially contribute to the mistake.

No matter what stage you’re currently up to with a benefit fraud investigation, or a tax credit charge, we want to hear from you. You have a right to legal representation, so get in touch with us as soon as possible. You can call us on 020 7381 8111, or email us at [email protected].

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