HMRC has begun sending letters to Department for Work and Pensions (DWP) claimants regarding tax credit claims dating back as far as 20 years, with a warning that providing incorrect information could result in a fine of up to £3,000. The letters are part of the ongoing closure of the tax credits system, which ended in 2025 as claimants were moved onto Universal Credit.
Why are HMRC contacting claimants now?
According to HMRC, during the process of closing tax credits, it was discovered that some awards had an incorrect finalised status, meaning an award notice was not issued when it should have been. The tax authority is now fixing these cases, which has led to the issuing of finalised award notices.
One taxpayer took to X to question the timing, saying: "Please could you explain why I received a letter from you yesterday relating to my tax credit claim from 2006-07." They added: "I'm just wondering why you are sending letters relating to claims from 20 years ago. It's not showing an underpayment or overpayment."
What claimants need to do
HMRC advises that if all the information on the notice is correct, no action is needed. However, claimants should check that the details are accurate, as this is part of 'finalising' tax credits. If there is a mistake or personal details are wrong, claimants must contact HMRC by the deadline stated in their Annual Review letter.
If claimants do not get in touch before the deadline, HMRC will use the information they have to finalise the tax credits, which could result in either an underpayment or overpayment. HMRC warns: "You could be fined up to £3,000 if you give wrong information."
Repayment of overpayments
For those receiving Universal Credit, any tax credit overpayment will be repaid automatically through reduced future payments until the debt is cleared. Claimants who have not made a claim for Universal Credit will need to pay HMRC directly.
The letters are part of the managed migration process that saw tax credits replaced by Universal Credit, which began in 2025. HMRC has confirmed that the issue of finalised award notices is generating the current correspondence, and they are working to resolve affected cases.
Claimants are urged to read their letters carefully and respond promptly if any information appears incorrect. Failure to act could result in financial penalties or unexpected repayments.
