TCTM09260 - Decision Making: Valid Claims, Conclusive Entitlement and Changes to Decisions: Changes to a conclusive decision

Important

If a conclusive decision has been made and none of the parts of the Tax Credits Act or the Taxes Management Act detailed below allow a revision, then the decision must stand and cannot be altered, even if it is incorrect. To alter this decision would be unlawful.

Please see the glossary at TCTM09530 for a definition of conclusive decision.

There are different parts of the Tax Credits Act that allow changes to an earlier conclusive decision, but only at specific times of the year and in prescribed circumstances.

Section 18 (for full detail see TCTM06106) - allows a relevant conclusive decision to be revised if the claimant makes a new declaration or statement before 1SD (or 2SD if they supplied estimated income by 1SD).

When a claimant has provided a declaration or statement of estimated income an initial decision on entitlement under s18(1) is made. A second decision on entitlement, this time under s18(6) is made if the claimant provides actual income by 2SD or after 2SD where they do not. Where the claimant does not provide their actual income, HMRC make the second decision treating the estimate as their actual for the year. Both of these relevant s18 decisions carry the right of appeal as outlined in s38(1)(b) of the Tax Credits Act.

Section 19 - allows an enquiry to be opened as long as certain criteria are met (for full detail see TCTM09410). If the findings of this enquiry are that something is wrong with the claim, then the original decision can be revised.

Note: time limits on opening an enquiry are detailed at TCTM09410

Section 20 (for full detail see TCTM09420) - allows a decision to be revised where the board has reasonable grounds for believing that a conclusive decision relating to entitlement is not correct. There are various specific criteria that apply to this and s20 can be applied in two circumstances:

  • where the claimant’s income tax liability has changed (the full list of applicable changes is at s20 TCA, TCTM12000)
  • where the board reasonably believe that the incorrect decision is attributable to fraud or neglect attributable to the claimant(s)

The time limits for a s20 decision are at TCTM09420

Section 21 (for full detail see TCTM09430) - allows a decision to be revised if it is incorrect due to ‘official error’ and:

  • the new decision is in the claimant’s favour, and
  • the claimant did not materially contribute to the error (Official Error Regulations 2003)

Note: A decision made using s21 may only be revised at any time not later than five years after the date of the decision. (Prior to 6 April 2010 this read as five years after the end of the tax year to which the decision relates).

Section 21A (for full details see TCTM09435) - allows an appealable decision to be reviewed if we receive a written application identifying the claimant and the decision in question and:

  • the application is received within 30 days of the date of the decision, or
  • is received outside of the 30 days as may be allowed under s21B

Note: The review is commonly referred to as a Mandatory Reconsideration.

Section 21B (for full detail see TCTM09435) - allows us to extend the 30 day time limit for the claimant to request a mandatory reconsideration if all of the following conditions are met:

  • the person seeking the review has applied for an extension; and
  • the application explains why the extension is sought, and
  • the application is made within 13 months of the date of decision;
  • HMRC are satisfied that the application for the review was not made within 30 days due to special circumstances;
  • HMRC are satisfied that is reasonable in the circumstances to grant the extension.

Section 21C (for full details see TCTM09437) -allows a conclusive (final) decision to be reviewed if we receive a customer notification (orally or in writing) which identifies the claimant, the decision in question and:

  • it relates to the award of a relevant disability benefit (either for themselves, a child or a QYP they are responsible for ) for the tax year relating to the relevant decision, and
  • the notification is received by HMRC within one month of the date the claimant was notified of the award of the relevant disability benefit.

Appeals

With effect from 06 April 2014, an appeal may not be brought against an appealable decision unless a review of the decision haas been carried out under s21A or s21C and notice of the conclusion on the review has been given.

If a claimant appeals against a conclusive decision, the appeal is successful and a tribunal directs HMRC to amend a decision, this can (and should) be done.

In addition, HMRC on receipt of an appeal can choose to revise a decision under s54 of the Taxes Management Act 1970. This allows HMRC to settle an appeal on the basis that the appeal would be successful if it were to go to tribunal (full detail of this can be found in the Taxes Management Act s54).