Commentary on Sections Recovery of Top-Up Payments Section 36: Recovery of top-up payments where tax credit award made on appeal
160.Section 36 sets out the rules that apply where a person has a childcare account and the person or their partner also has an ongoing tax credit appeal which is subsequently upheld. If the person’s tax credit appeal is upheld their tax credit award will be backdated, possibly for some months, and therefore there could be a significant period when the person is entitled to support under both this scheme and under tax credits. The section allows for the recovery of top-up payments received during any entitlement period that falls within both the appeal period and the period for which the award of tax credits is made or continued as a result of the appeal decision. The effect of this provision is to prevent a person getting support under both schemes.
161.Subsection (1) provides for this rule to apply where a person or their partner has an appeal upheld against a decision either not to make an award of tax credits or to terminate a tax credit award.
162.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’. Subsection (5) sets out that the ‘relevant proportion’ of any top-up payments is equal to the proportion of the entitlement period which falls within the relevant period.
163.Subsections (3) and (4) set out how the ‘relevant period’ is to be determined. This is a period which falls within both the appeal period and the period for which the award of tax credits is made or continued as a result of the appeal decision. The ‘appeal period’ begins on the day on which the decision which is the subject of the appeal is made and ends on the day the person is notified of the decision on the appeal or, if that day is part way through an active entitlement period, the last day of that period.