Commentary on Sections Other Enforcement Powers Section 54: Set-off
239.Section 54 deals with certain debts owed to HMRC by the holder of an inactive childcare account.
240.Section 22 provides that when an account-holder makes a withdrawal from a childcare account, the amount of top-up payment which corresponds to that withdrawal must be returned to HMRC. Under section 54, if a withdrawal is made by the holder of an inactive account who owes a debt to HMRC in respect of recoverable top-up payments, the corresponding top-up element that is returned to HMRC will count as a payment against their debt.
241.Subsection (3) provides that if any of the top-up element of a withdrawal is used against a debt in this way, the amount of the withdrawal that led to this repayment cannot be added back to the relevant maximum qualifying payment for an entitlement period. This is different from the normal position, under section 19(8), where withdrawals are added back to this maximum.