22 September 2011
HMRC extend period-of-grace by a further 30 days for anyone who missed the 31 July deadline.
Further to our blog post of 23 August 11 "Tax credits renewals - missed the 31 July deadline?"
We can now confirm that HMRC have extended the 30 day legislative period-of-grace by a further 30 days (making a total of 60 days) for this year's 2010/11 renewals cycle.
This means that if your client missed the 31 July 11 deadline and has received a ‘statement of account’ telling them that their payments have stopped, they now have up to 60 days from the date on this document to contact HMRC in order that they can process the renewal and re-instate your client's 2011/12 claim back to April.
If your client misses the 60 day grace period, they can only renew and secure their entitlement for the whole of 2011/12, if they:
- have ‘good cause’ for their failure to renew so far, and
- complete their renewal by 31 January 2012.
If good cause doesn’t apply, HMRC will ask them to repay all payments made to them from the start of the tax year, and they will need to make a new claim for tax credits which can only be backdated 93 days.
If the deadline has been missed, contact HMRC as soon as possible. Claimants should telephone the Tax Credits helpline on 0345 300 3900 (Textphone 0345 300 3909). Authorised Intermediaries acting on behalf of their clients should contact the Intermediaries helpline.
We have written a detailed guide about the renewals process which explains what packs claimants should receive, what they need to do and other points about the process that advisers should be aware such as what to do if your client has missed the deadline or wants to withdraw from the system.
HMRC have also produced a help sheet for advisers which gives an overview of the process.
Update 27 Sept 11: Due to an error, HMRC have incorrectly finalised some claims for 2010/11 before the 60 day period-of-grace has expired. Whilst HMRC are maintaining their commitment to re-instate these cases where the claimant contacts them within 60 days, their processes mean that they can't do this unless they open an enquiry into the incorrectly finalised 2010-2011 claim. This will allow the 2010-2011 claim to be re-finalised using correct income information and the 2011-2012 claim to be put back into payment based on the correct previous year income.
Advisers will be able to distinguish between this ‘workaround to enable the re-instatment of the claim’ from a ‘normal compliance enquiry’ as the letter informing the customer that they are opening an enquiry into their claim will have ‘Early Finalisation Letter’ printed in the bottom right hand corner. If your client receives one of these letters, it means that HMRC are using this workaround to re-finalise the details for the previous year in order that they can re-instate the current year's claim back to April 2011.
This does of course mean that HMRC lose their right to open an enquiry into the 2010/11 claim at a later stage and whilst their discovery powers allow them a second bite of the cherry following an enquiry the circumstances within which this can occur are very limited.