Commentary on Sections Recovery of Top-Up Payments Section 35: Recovery of top-up payments where tax credits award made on a review
157.Section 35 sets out the rules that apply where a person who has a childcare account, or the person’s partner, has applied for a review of a decision not to make, or to terminate, a tax credit award and the decision is changed. Where this means that they receive a backdated tax credit award, there would be a period when they would have received support under both schemes. The section allows for the recovery of top-up payments received during any entitlement period or part of an entitlement period that overlaps with both the period of the tax credits review and the period for which a tax credit award was made or continued as a result of the review decision. The effect of this provision is to prevent a person getting support under both schemes.
158.Subsection (2) provides that the person must pay HMRC an amount equal to the top-up payments made for an entitlement period falling within the ‘relevant period’, or the ‘relevant proportion’ of top-up payments where only part of the entitlement period overlaps with the ‘relevant period’. For example, if a person has received £500 of top-up payments during an entitlement period, and one month of that entitlement period falls within the ‘relevant period’, the amount the person would be liable to pay would be a third of £500. Where a person has not received any top-up payments there will be nothing for them to pay.
159.Subsections (3) and (4) set out how the ‘relevant period’ is to be determined. This is a period that falls within both the ‘review period’ and the period for which a tax credit award was made or continued as a result of the review. The ‘review period’ is defined as starting on the day the decision is made and ending on the day the person who applied for the review is notified of its conclusions or, if that day is part way through an active entitlement period, the last day of that entitlement period. Thus the review period is the maximum period for which the person could have been entitled to childcare support under both schemes.