137.Section 30 automatically terminates a person’s tax credit award, or a tax credit award made to their partner (whether as a result of a joint or single claim), when they make a valid declaration of eligibility under the scheme. This prevents anyone from receiving support under both tax credits and the new scheme. The automatic termination means a person who is on tax credits who decides to move to the new scheme does not need to do anything in relation to their tax credit award: the award will simply terminate when they move across.
138.Subsections (1) to (3) set out how a person’s, or their partner’s, tax credits award is to cease in relation to their entitlement under the new scheme. If the person is opening a new childcare account their tax credits award will cease with effect from the day before their first entitlement period begins. If they already have a childcare account, and have a new partner who is on tax credits, the partner’s tax credits award will cease immediately before the first entitlement period that starts after they become the person’s partner (or, if the person does not make a timely declaration of eligibility for that entitlement period, the day before the person makes their declaration of eligibility).
139.Subsections (4) and (5) provide that if a person makes a valid declaration of eligibility for more than one entitlement period during the period when they are waiting for their or their partner’s tax credit claim to be decided, the tax credit award will cease immediately before the first entitlement period for which a declaration of eligibility was made (or if later, the day before the person made their declaration of eligibility for that period).
140.Subsections (6) and (7) deal with cases where a person or their partner appeals against, or seeks a review of, a decision relating to their entitlement to tax credits. In these circumstances the usual rule in subsections (1) to (3) that the person’s or their partner’s tax credit award will cease immediately before the first entitlement period (or the day before the person makes their declaration of eligibility for that period) will not apply in relation to any entitlement period beginning before the person is notified of the outcome of their tax credit appeal or review.
141.Subsection (8) requires HMRC to notify a person if their tax credit award is terminated by virtue of this section. The tax credits legislation will apply to the person, subject to any modifications made in regulations to deal with the consequences of terminating a tax credit award under this section. This is to ensure that a person’s entitlement to tax credits ceases at the appropriate time and their tax credit award is calculated correctly.
142.Subsections (9) and (10) allow for further provision to be made by regulations to deal with payments that relate to tax credits, such as provisional payments made after the end of the tax year where a person is entitled to make a tax credit claim for the new year, but has yet to do so. Regulations may modify the application of tax credits legislation and the provisions of this section to deal with the consequences of ceasing entitlement under this provision. This is to ensure that a person’s entitlement to these payments ceases at the appropriate time and their award is calculated correctly.
143.Subsection (11) provides that where a declaration of eligibility under the Act is subsequently found to be invalid, this does not affect anything done under this section as a result of the making of that declaration.
144.Subsection (13) provides that this section will cease to have effect when Part 1 of the Tax Credits Act 2002 is repealed by Schedule 14 to the Welfare Reform Act 2012. This is because this section will be unnecessary when tax credits have been replaced by universal credit.
145.Section 31 allows regulations to be made to terminate a person’s or their partner’s universal credit award or entitlement to payments related to universal credit, where the person has made a valid declaration of eligibility under the new scheme. This is to prevent anyone from receiving universal credit or related payments at the same time as claiming childcare support under the new scheme.
146.Subsection (2) gives the Treasury power to amend the Act by regulations in order to provide that entitlement to universal credit ceases when a person has made a valid declaration of eligibility under the new scheme, and to amend or repeal the eligibility criteria in section 11. This would mean that a universal credit award made to a person who moved to the new scheme would simply terminate when they moved across. The subsection also enables the Secretary of State or a Northern Ireland department to be given power to make regulations to ensure that a person’s or their partner’s entitlement to universal credit is calculated correctly where an award is terminated under this section.
147.Section 32 allows HMRC to disqualify a person from receiving top-up payments or give them a warning notice if they or their partner make a successful claim for tax credits while they are receiving support under the scheme and the person or the person’s partner (who could be a new partner) makes a declaration of eligibility within 12 months of making the claim for tax credits. A person can only be disqualified if they have been given a warning notice in the last four years.
148.This does not apply if the circumstances of the person or the person’s partner changed after the beginning of the entitlement period in which the tax credits claim was made. Subsection (5) allows for regulations to set out what is, or is not, to be regarded as a change of circumstances for these purposes.
149.A person can only be given a disqualification notice if they have had a warning notice under this section or section 33. A warning notice is defined in subsection (4) as a notice which tells the person that they may receive a disqualification notice if they make a claim for tax credits or universal credit in the same way within a four-year period.
150.Section 33 has similar effect to section 32 and applies to people who claim universal credit. It allows HMRC to disqualify such a person from receiving top-up payments if the person or their partner makes a successful claim for universal credit while they are receiving support under this Act and the person, or their partner (who may be a new partner), makes a declaration of eligibility within 12 months of the date on which the claim for universal credit was made.
151.Section 34 provides the rules about when HMRC may give a disqualification notice to a person who has been given a warning notice under section 32 or 33.
152.Subsection (1) requires HMRC to give the person a warning notice under section 32 or 33 before they can disqualify a person from receiving top-up payments.
153.Where HMRC gives a person a disqualification notice, they cannot open a childcare account, no payments can be made into a childcare account which they hold and any declaration of eligibility they have made is invalid. A copy of the disqualification notice must be given to the account provider.
154.A disqualification notice lasts for the period stated in the notice. However, under subsection (4), a notice cannot remain in force for longer than 3 years.
155.Subsection (5) stipulates that the period stated in a disqualification notice may begin before the date of the notice but cannot commence before the beginning of the entitlement period for which the declaration of eligibility which caused the notice to be given was made. This might apply where a person makes a late declaration of eligibility, with the effect that the disqualification notice can be backdated to the start of the entitlement period for which they are making their late declaration.
156.Subsection (7) allows HMRC to revoke a disqualification notice.