I have client with an overpayment due to a IR Computer error.

The overpayment is for £1200. They immediately stopped my clients CTC/WTC.
They did send a letter of apology, explaining how the overpayment came about, stating that the computer in its infinate wisdom had left off the clients husbands wage.
Funny thing is, the notification to the client listed both salary's, so as far as they were concerned there was no error.
My client has contacted the Tax Credit helpline, only to be told that they had no record of their particular overpayment.

Has anyone had a similar experience?

Jonathan

CLS Direct

0845 456 6805

You are very lucky if you have only had one. I have a couple where payments appeared from nowhere, so far only trying to get one back.

They should not have stopped the WTC/CTC award though. If there is an overpayment they can only recover a set percentage dependent on what is in payment - 10% for max award; 100% for CTC family element only and 25% for all others.

I would challenge recovery - if you have a letter showing that husband's wage included how could it be reasonable for client to know that there was an overpayment.

I've not had that accepted yet by IR but keep trying, it's got to be accepted sometime. I also back it up with an appeal against the decision in the hope that if I get to Tribunal a chair will say can't decide on overpayment but may write on notice that they don't understand how it was reasonable to know. Then I can wave that at the IR!

Thanks Derek.....I shall advise my client accordingly. I have already advised them to appeal.

Its interesting that they have stopped all the tax credits without any warning.....I wonder how often this happens.

Cheers

Jonathan

I've come across a couple of these. The computer zeroed their partner's income when the clients had phoned to amend their own income after having a baby. The award was then based on just one income (low, being on maternity leave) and resulted in virtually full CTC and WTC for the year. However, the award notice still detailed both incomes correctly!

There must be plenty of other people in this situation, unaware their claim is based on only one income. This glitch has apparantly been fixed - I hope so.

Think so, nope, I have a case infront of me where total award for 04-05 is £7456 WTC/CTC. Award letter shows income for husband of 13K and wait for it - roll of drums and fanfare - wifes income of £176,436.

She only receives Carers Allowance and is understandably miffed that the DWP have been underpaying her.

Problem is - the IR don't consider it an overpayment if they see it and rectify it within the same tax year. I've had one case that's been going on for a while, and finally they explained to me what actually constitutes an overpayment, ie, that it has to have gone through the end of year statement and been carried forward to the next year's award. As far as I can make out there's not a lot you can do if the mistake has been spotted immediately. Anyone had any success with this?

My understanding is:-

1. If they find the overpayment during the tax year when it arose they will try to recover it by reducing or stopping payments.

2. If this causes hardship, the claimant can apply for top-up payments.

3. If the overpayment has not been fully recovered by end of tax year, it becomes part of the year-end reconcilation & recovery after that is based on the % figures Derek Bell's post above stated.

I had a complex case last year where they had repeatedly been told too much was being paid. It went through the Complaints machinery & is now with the Adjudicator's Office. If there is a good case I think it well worth doing this, even though it takes ages to get anywhere!

The problem with this is that you can only apply for top-up payments if they consider that an actual overpayment will arise.

So if your entitlement for the year is correctly, say, £6000, and they pay you £5000 by the end of May, then they will pay you the remaining £1000 at £100 per month over the remaining 10 months of the year. However, you will have been expecting £500 per month and may well have budgeted for it. It's all very well saying you shouldn't have spent the £5000 but the majority of the people who this affects are already in debt anyway.

And in this kind of situation there is no projected end of year overpayment so the claimant cannot apply for top-up payments, is my understanding. It does not mean they are not suffering great hardship.

I may well have got this wrong, but I can't interpret pages 3 & 4 of COP26 in the way Andrew's post indicates. There doesn't seem to be any reference to what the situation at the year end will be. But I think careful reading of those pages is necessary before trying to get extra payments so that the category the claimant comes into can be spelt out to TCO.

I have tried several times to use the hardship argument with in-year "overpayments". Unless the overpayment happened in a previous tax year the IR will not even call it an overpayment and therefore its own guidelines do not apply. They will only look at the amount that has been paid over the whole year. This can work in a client's favour, eg, if a client has been earning £10 grand p.a. until September, and then gets a job earning £15 grand for the remaining 6 months of the tax year his/her income will be assessed as £5k + £7.5k, and so for the rest of that tax year they will receive more tax credits than they would do in the next tax year, because income is taken as yearly. Does that make sense? - I'm not sure that I've explained that very well. it is almost first thing on a Monday afterall.

I agree they won't call anything an overpayment until after the year-end reconcilation has been done, although page 3 of COP26 does refer to "possible overpayment" in an "in year" context. BUT page 3 also makes it quite clear that - in certain circumstances - they will not take all of an in-year "overpayment" back in 04-05. One of those circumstances is hardship, but only if other conditions (e.g. the "overpayment" is not due to error by the claimant)are met. So if the conditions in COP26 are met and they are refusing to do anything, it seems they are ignoring their own guidance. Using the Complaints procedure would seem to be indicated. Alternatively, can the relevant decision be appealed? (I know you can't appeal a decision to recover an overpayment but- according to them - no overpayment has occurred so it seems logical to assume the decision to reduce the payments could be appealed.)

I must admit all the above is somewhat theoretical as far as I am concerned, because I haven't had to deal with a hardship case this tax year (lucky me!).