Tax Credit Premium for Children on Personal Independence and DLA Payments

Tax Credit Premium must be paid

The Guardian newspaper reports that  families with disabled children have been denied payments of Tax Credit Premium. Some claims go back over 5 years. According to the Government this is due to a “a gap in the data feed between DWP and HMRC”.  Some families have lost £20,000.

The Government say that they will only backdate payments to the beginning of the tax year. This is because they say they have no legal power to backdate the payments further.  However we believe that if the Government had the will they could and should pay all the backdated premium. Section 20 of the Tax Credit Act 2002 may enable families to receive all the money they are due.

The circumstances are these:

  • Applicants on benefits have told the DWP that they have a child with disabilities in receipt of DLA or PIP.  (In practice this is every applicant because there is a question on the claim form asking if  children  are in receipt of PIP or DLA).
  • The DWP has not passed this information on to HMRC so that the premium can be applied to the Child Tax Credit.
  • The Applicant has neglected to tell HMRC about the receipt of DLA or PIP.

The law

S20 states that:

(4) Where the Board have reasonable grounds for believing that—

(a) a conclusive decision relating to the entitlement of a person, or the joint entitlement of persons, to a tax credit for a tax year is not correct, and

(b) that is attributable to fraud or neglect on the part of the person, or of either of the persons, or on the part of any person acting for him, or either of them,

the Board may decide to revise that decision.

Our argument is that:

  1. Child Tax Credit has not been correctly calculated. This satisfies Section 20 (4) (a) and
  2. The incorrectly calculated  entitlement is attributable to neglect on the part of the applicant – namely neglecting to tell HMRC about the award of DLA or PIP. This satisfies Section  20 (4) (b).
  3. Therefore there has been an incorrect calculation of entitlement. As a consequence HMRC can  lawfully make back payments of up to five years. Not the seven months they propose.

Because the section was  designed to deal with fraudulent claims it allows back calculation of up to 5 years. However nowhere does it state that the entitlement review must be because of fraud.

It is certainly worth running the argument and if necessary going to a tribunal. Accordingly as the sums are large at £3140 per year and a further £1275 a year if the PIP or DLA are at enhanced rates, applicants should claim back payment now. In Keith’s words:

“There is nothing to say that they couldn’t use s.20(4) (b) to go back 5 years thereby resolving the issue”. 

Keith Hollywood

Keith Hollywood Benefits expert contributed to this article

In conclusion if you have not  been paid the Tax Credit Premium and wish to bring a case  call Keith on 0208 986 8336 or e mail him at [email protected] for some early free of charge advice.

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