HMRC has written to over a million tax credit claimants after omitting important income figures from their renewal notices
The Low Income Tax Reform Group broke the story, warning all tax credit claimants they now need to check their paperwork carefully and are urging HMRC to use the full extent of its powers to correct any issues that may arise later due to this glitch.
If claimants do not let HMRC know by 31 July that the figure they hold is wrong or just an estimate at this stage, they risk either receiving fewer tax credits than they are entitled to or receiving too much, which will be clawed back, perhaps, unexpectedly, from any ongoing tax credit payments.
This follows a decision by HMRC to automatically renew most tax credit claims this year considering the Covid-19 pandemic. This is a departure from the usual process for several claimants. Automatic renewal means that HMRC states the claimant’s circumstances on a renewal notice and the claimant only needs to contact HMRC if the income showed or circumstances detailed are wrong. Otherwise, HMRC will finalise entitlement for 2019/20 and put in place a claim for 2020/21 on 31 July (or shortly after).
The tax authority has apologised for the mistake but emphasised that the errors have not affected the calculations made for proposed payments.
Although tax credits are being replaced by universal credit, some 3 million people still receive them.
HMRC has now sent a follow-up letter with these income details used in its tax credits calculations. It said the omission was due to human error. A spokesman said: “We are sorry that this happened, and for any inconvenience caused. We want to make sure we have paid customers the correct amount.”
They explained: “A significant proportion of these customers are self-employed, and we need to confirm their previous tax year’s income has been correctly accounted for and to make sure they don’t miss the opportunity to give us an estimate if they are not certain about their income for this year.”