28 July 2017

Tax Credits - Emergency Payments

We previously advised, in our post in January, that HMRC were planning to withdraw their use of cashcheques and introduce a new system for manual and emergency payments. 

HMRC have provided more detail about the changes, which take effect from 7 August 2017. Claimants should note that the Post Office will no longer be able to cash 'cashcheques' after 30 September 2017.

The new system of payment is by Payment Voucher and HMRC have provided a useful list of questions and answers to help explain how it will work:

What will change for customers?

From 7 August 2017 HMRC will introduce Payment Vouchers to replace payments by cash cheque.  These payments will only be made in the following circumstances:

Primarily customers will be asked to provide bank account details if one is not shown on their account.  If this is not possible and they meet the above criteria, then they will receive a Payment Voucher.

A customer will be sent a barcode and unique reference number by letter, or just the unique reference number by SMS text, which can then be taken to any Post Office where the customer will receive their payment.  Full instructions about how to use the code and the identification they will need to take with them will be provided when they receive the code.

How will we communicate these changes to our customers?

Customers who have previously received payments by cheque will receive a direct communication advising them of the changes to their payment method.  We will remind customers that they need to provide bank account details.

New customers who have submitted a claim will be asked to provide account details immediately.  If this is not possible and none of the above circumstances apply then a payment will be made initially as a Payable Order but customers will be advised that future payments will be dependent on them providing bank account details.

If a customer is a refugee we will ask for account details but where these cannot be provided we will make ongoing payments using the alternative method until the customer obtains an account.  We will remind customers regularly of the need to open a bank account and provide us with the details.

Why is this new payment method being introduced?

HMRC will stop issuing payments for Tax Credits and Child Benefits by cash cheque from 7 August 2017.  Cash Cheques are no longer supported by our banking supplier and the Post Office. Payments into accounts such as bank or building society accounts are more secure and accessible to customers.  However, we acknowledge that in certain exceptional circumstances it is not possible for all customers to receive payments direct into an account so have introduce an alternative payment method to make sure that payments continued to be made.

When will this change happen?

Payments by the new payment method will start from 7 August 2017

What is the new payment method?

The new payment method is called “Payment Voucher”. It has been used by the Post Office for over 7 years. Customers will receive a code and unique reference number by letter or SMS text which can then be taken to a Post Office where the customer will receive their payments. Each Payment Voucher will expire 1 month after the date of issue.

What will the customer need to take with them?

Customers will need to take their Payment Voucher to the Post Office and provide one of the following forms of identification in order to receive payments:

Will someone be able to collect the payment on behalf of the customer?

Yes, with the customer’s consent but the third party must supply the customer’s ID, not their own. Instructions on how to do this are on the Payment Voucher.

How secure is this new payment method?

Although this product is not as secure as using a bank account, it is more secure than using Cash Cheques. When the Payment Voucher is cashed the Post Office systems update immediately to show the code has been used, which prevents it being used more than once.