Overpayments because HMRC has cancelled your claim by treating you as part of a couple when you were making a claim as a single person (or by treating you as single when you were claiming as part of a couple)

Since 18 January 2010 if HMRC says you should have claimed as part of a couple person rather than as a single person (or vice versa),then HMRC should automatically take into account the amount of tax credits you should have received if you had made a correct claim. There is guidance on this issue in the Claimant Compliance Manual at   http://www.hmrc.gov.uk/manuals/ccmmanual/CCM15700.htm and following pages.

One key point is that in order to receive this ‘Notional Entitlement’ treatment, which can reduce your overpayment, you need to make a new valid claim: so, for example, if you should have been claiming as a couple, you need to make a new claim as a couple.

Other points to consider:

Is HMRC’s position correct?

1)      For married couples or civil partners, you need to have separated in circumstances which are likely to be permanent, or under a court order. This means that you may be living apart and still be part of a couple. See  http://www.hmrc.gov.uk/manuals/ccmmanual/CCM15035.htm . By contrast for, people who are living together but are not married or civil partners, normally separation would be sufficient to establish that the relationship has ended

2)      Is there a new household? There are five ‘Signposts’ which indicate that people are living together as a couple. You may not agree which HMRC’s initial conclusion that you are a couple. The signposts are:

• Living in the same household
• Stability of the relationship
• Financial support
• Dependent children, and
• Public acknowledgement

See TCTM09080 and links  http://www.hmrc.gov.uk/manuals/ccmmanual/CCM15040.htm

Has the overpayment been split 50% each for a joint claim?

Current HMRC policy is to recover 50% of the overpayment from each party to a joint claim. See http://www.hmrc.gov.uk/manuals/dmbmanual/DMBM555410.htm