Tax Credits: Official error

This is not the 'official error' test as understood by those who have experienced tax credit overpayments due to HMRC error or delay. Official error in this context is defined as an error relating to tax credit made by:

to which neither the claimant nor any person acting for the claimant materially contributed. Official Error is covered under Section 21 Tax Credits Act 2002 and the Official Error Regulations 2003.

A decision may be revised by reason of official error at any time within five years of the date of decision. Prior to 6 April 2010, the time limit was five years from the end of the tax year to which the decision related.

This is a useful alternative to an appeal where the only problem is a clear mistake in the award on which both sides can agree and which HMRC can simply correct retrospectively without the panoply of an appeal. It can also be used where the time limit for an appeal has passed, providing the conditions above are satisfied.

From 6 April 2013, HMRC introduced a 3 month time limit for disputing overpayments. As a result of this, the use of official error as distinct from appeals and disputes will become far more important.

In theory, if HMRC accept an official error argument, the award should be amended so that the overpayment disappears. This is different to a dispute whereby the overpayment exists, but HMRC write it off. In practice, prior to the 3 month dispute time limit being introduced, it didn’t matter whether HMRC dealt with an issue as a dispute or official error request as the result for the claimant was the same.

However, with the 3 month time limit now in place (from 6 April 2013) it is important to ensure that official error is considered as a third route alongside appeals and disputes. It may be useful where the appeal and dispute time limits have expired.

Requests for official error reviews should be sent to -

HMRC
Tax Credits Office
BX9 1ER.

The HMRC position is that there is no right of appeal against their refusal to amend an award under this official error process. However, as far as we are aware this has not been directly tested through the Tribunal process  and so advice should be sought as to whether such a challenge can be mounted. An alternative would be judicial review action.

Last reviewed/updated 5 May 2023