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From October 2014, HMRC has the computer capacity to enable it to claw back unpaid overpayment debts from old claims from new ongoing tax credit awards. The Low Income Tax Reforn Group (LITRG) have put together a guide to explain this new system of cross-claim recovery.

Cross claim recovery can apply in these situations:

  • A joint ongoing claim can be reduced to recover debts from old single claims of one or both members of the couple.
  • A single ongoing claim can be reduced to recover debts from an old single claim of the same person.
  • A joint ongoing claim can be reduced to recover debts from an old joint claim if the same two people are involved in each claim.

However where the old debt is already being repaid directly to HMRC it will not be included for cross-award recovery from ongoing payments.

Examples and further guidance: LITRG on cross-claims