TCTM09437 - Decision Making: Revised decisions, considering evidence and recording of decisions: Section 21C late review

Section 21C- Late Review: award of relevant disability benefits

From 15 Janury 2021, s21C provides a review power for backdatin tax credit disability elements where the change affects previous year (PY) tax credit awards and earlier, as per Reg 26 and 26A of the Claims and Nofications Regulations. (see TCTM05310 and TCTM05320)

A s21C review is a review of a conclusive (final) entitlement decision outside of the time limit of a Mandatory Reconsideration (s21A and extended by s21B).

This means that when a claimant notifies HMRC of the award of a relevant disability benefit within one month, HMRC will review any final conclusive decision that the benefit may cover to determine entitlement to tax credit disability elements.

The final conclusive decisons which can be reviewed using s21C are the decision which carry the right of appeal as outlined in s38 of the Tax Credits Act.

A review under s21C must be carried out where:

  • the claimant notifies HMRC of the award of a relevant disability benefit either orally or in writing; and
  • the change of circumstances results in an award of :
    • disability or severe disability element of WTC or both, or
    • disability or severe disability element of CTC for a child or QYP; 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.

Relevant Disability Benefits means:

  • armed forces independence payment;
  • attendance allowance;
  • disability assistance;
  • disability living allowance;
  • employment and support allowance;
  • housing benefit, where a pensioner or a disability premium is included;
  • incapacity benefit (whether short or long term);
  • income support where a pensioner or a disability premium is included;
  • limited capability for work credit;
  • a mobility supplement or a constant attendance allowance where the supplement or benefits is paid in conjunction with a war pension or idustrial injuries disablement benefit;
  • personal independence payment;
  • severe disablement allowance;
  • statutory sick pay.

If the above conditions are met, a review under s21C may be undertaken and the disability element or severe disability element of WTC or CTC can be backdated to the start date of the relevant disability benefit.

S21C (4) to (7) mirror the requirements provided in s21A Mandatory Reconsideration (TCTM09435) to carry out the review in a timely manner, for HMRC to reach a conclusion of the review and to notify the claimant of the conclusion of the review. HMRC also have the power to seek further information while undertaking the review but are not required to await a reply.

When the review has been carried out, for each affected PY tax year we must provide the claimant with notice of the conclusion of the review. The notice must details our conclusions and the reasons for the conclusion.

The conclsion must be one of the following:-

  • that the decision is upheld;
  • that the decision is varied;
  • that the decision is cancelled.

If HMRC refuse full backdating of a disability element and the new s21C review is completed, a clamaint can submit an appeal to Tribunal.

Late Notifications

Claimants who fail to report the award of a qualifying benefit to HMRC within the one month time limit will not be able to benefit under a s21C review. In these cases, a s21C review will not be undertaken on the conclusive final decision and the disability elments or severe disability element wil be restricted to one month’s backdating.

Note: COVID-19 Period of 23 May 20 to the end of the Coronavirus Job Retention Scheme (CJRS)

Reg 26B of the Claims and Notifications Regulations provides claimants who are critical workers up to 3 months to notify HMRC of a relevant disability benefit (see TCTM05325).

Example 1 - In time notification where the WTC disability backdating covers PY and CY tax years

A person received WTC from April 2015 and they claim PIP on 20 December 2019. Entitlement to PIP was decided on 5 February 2021 and was payable from 20 December 2019. The claimaint notifies HMRC within one month of receiving notification of the decision. The disability element of WTC can be backdated to 20 December 2019 (the date the PIP became payable), covering the tax years 2019-2020 and 2020-2021

PY Tax Year 2019-2020: The s18 conclusive decision has been taken for this year. A s21C review is undertaken on this tax year to revise the s18 decision and include the disability element from 20 December 2019 to 5 April 2020.

CY Tax Year 2020-2021: The tax credits award for the tax year 2020-2021 is ongoing and unfinalised. A s15 decision is undetaken on this tax year to include the disability element of WTC from 06 April 2020.

Example 2 - In time notification where the WTC disability backdating covers PY and PY-1 and the tax credits award ended in PY.

A person received CTC from April 2015 and they claim PIP for their child on 20 October 2018. The tax credits award terminated on 15 September 2019 and subsequently entitlement to PIP for their child was decided on 5 February 2021 and was payable from 20 October 2018. The claimaint notifies HMRC within one month of receiving notification of the decision. The disability element of CTC can be backdated to 20 October 2018, (the date the PIP became payable) covering tax years 2018-2019 and 2019-2020.

PY-1 Tax Year 2018-2019: The s18 conclusive decision has been taken for this year. A s21C review is undertaken on this tax year to revise the s18 decision and include the disability element of CTC from 20 October 2018 to 5 April 2019.

PY Tax Year 2019-2020: The s18 conclusive decision has been taken for this year, with entitlement from 6 April 2019 to 15 September 2019. A s21C review is undertaken on this tax year to revise the s18 decision and include the disability element of CTC from 6 April 2019 to 15 September 2019.

Example 3 - Out of time notification where the WTC disability backdating covers PY and CY tax years.

A person received WTC from April 2015 and they claim PIP on 20 December 2019. Entitlement to PIP was decided on 5 February 2021 and was payable from 20 December 2019. The claimaint notifies HMRC more than one month after receiving notification of the decision. The claimant has not met the conditions for a s21C review on the PY tax year and the disability element of WTC cannot be backdated to 20 December 2019 (the date the PIP became payable).

CY Tax Year 2020-2021: The tax credits award for the tax year 2020-2021 is ongoing and unfinalised. A s15 in-year decision is undertaken to include the disability element of WTC, with backdating restricted to one month before the HMRC notification date.