Tax credits and early years e-bulletin October 2019 | CPAG

Tax credits and early years e-bulletin October 2019

28 October 2019

Our 2019/2020 Training and Publications brochure is available. We are running the following courses, also available in-house, which are particularly relevant to early years workers:

Find out more and book a place here


The following factsheets on financial help for families have been updated and are available to download from our website:

We have a limited printed supply of the last two of these factsheets. If you would like to receive printed copies please email



Many universal credit claimants cannot start work because they cannot afford to pay for childcare until they have been paid. To help overcome this problem, the DWP has confirmed in a Written Answer that the Job Centre’s ‘Flexible Support Fund’ can be used. This is paid directly to the childcare providers and can be used to cover a deposit, retainer, fees or taster/settling in periods. It does not have to be repaid by the claimant.

Universal claimants have also found it difficult to comply with the requirement to report childcare costs every month. From 16 October 2019, the time allowed for universal credit claimants to report their childcare costs has been extended by amending regulations. Childcare costs must be reported in the monthly assessment period in which they were paid, or the following monthly assessment period. Failing that, a report can still be accepted up to thirteen months late with good reasons.

See our updated factsheet for more information.

Out of School Care in Scotland Consultation

The Scottish Government wants to hear views on its draft framework on the future of out of school care in Scotland. This covers care provided to school age children including child-minding, after-school clubs, holiday clubs and breakfast clubs, and how to ensure this is accessible, affordable and high quality.  The consultation is open until 6 December 2019.

Find out more about the consultation 


The Scottish Government has a fund to support families with a premature or sick newborn baby in a neonatal unit at hospital with the costs of travel and food. This support is not means-tested and is available to all parents or guardians, regardless of income.

Evidence is required (for example, receipts or bank statements) for all public transport, parking and meals, and the form signed by a medical professional at the hospital.

The claim form can be downloaded online (available in English, Arabic, Mandarin, Polish and Urdu) and should be returned to the hospital within 3 months of the baby being discharged from hospital.

Find out more about the Neonatal Expenses Fund.



Best Start Foods is replacing Healthy Start Foods in Scotland. The voucher of £3.10 a week has been replaced with a payment card credited with £4.25 a week. Families who are eligible for the Healthy Start scheme have also been entitled to Heathy Start vitamins. The Scottish Government has confirmed that Health Boards will continue distributing Healthy Start children’s vitamins to families in receipt of either Healthy Start or Best Start Foods in this financial year.



This section summarises recent decisions of the Upper Tribunal; these set a binding precedent on HMRC or DWP decision-makers and First–tier Tribunals in similar cases.

Self-employed definition

The claimant was receiving working tax credit (WTC) as a self-employed legal advisor and car dealer. HMRC made a decision to terminate his award during the tax year because it decided he no longer met the definition of being engaged in carrying on a trade, profession or vocation on a commercial basis and with a view to the realisation of profits, which is organised and regular. The First-tier Tribunal upheld the decision, finding the trade or profession was not profitable (making only £49.00 a week for a 30-hour working week) not regular and organised, (the evidence only showed only five pieces of legal work and two car sales in a tax year), and lacked commerciality as the transactions were so few the businesses did not appear to be conducted as an effective business. The Upper Tribunal Judge identified errors of law in these reasons and found that:

  • whilst the profitability or otherwise of self-employment might be a relevant factor to consider amongst others, it cannot be said that profitability is actually a requirement;
  • it does not necessarily follow that a business is not regular and/ or organised simply because there are a limited number of actual financial transactions.

However, the First-tier Tribunal’s decision was not set aside because it had already been made redundant by a final decision at the end of the tax year – which must be the subject of a separate appeal. Read the decision in full: OM v HMRC [2019] UKUT 263 (AAC)


Q. My client has received a letter from the Department for Work & Pensions (DWP) about a tax credits debt from over 10 years ago, which she thought had been written off – can it be recovered?
A. If there has been no action for over ten years, and it was not the result of fraud, it should have been written off and should not now be recovered by the DWP.

In 2012, HMRC acted on a recommendation to remit all inactive debts over 3 years old, which resulted in remissions totalling £1.22 billion involving over 1 million aged and inactive overpayments, as stated in its annual report (para 9.10). In April this year, Amber Rudd, the Secretary of State for Work and Pensions at the time, gave an assurance to the Work and Pensions Select Committee that claimants will not be pursued for historic debt that has previously been written off. She stated:

‘Having consulted with my officials, I am pleased to confirm that the Department does not chase debts once they have been written-off. Once a debt has been written-off, it is zeroed on our systems to ensure no active recovery can take place. The only exception where we might seek to recover previously written-off debt is where debt attributed to official error later transpires to be the result of fraud. In such cases we reverse the write-off and pursue recovery. ‘

HMRC has begun the process of transferring old tax credit overpayments to the DWP to take recovery action. Approximately 600,000 debts are expected to transfer over a 3 year period, allowing the DWP to recover the debt, including directly from an individual’s earnings where a customer fails to repay the debt voluntarily. HMRC must write to all customers whose debt is moving to DWP in a letter which will provide details of their outstanding debt balance as well as a clear explanation of what will happen next. For claimants who are not on universal credit, the letter is TC1131 (non-UC). For claimants who are now on universal credit, the letter is TC1131, which allows the tax credits debt to be recovered from UC.