I am trying to be calm after a call to the not so nice people the tax credit recovery section. My client is getting IS for herself and maximum CTC for her 3 children. She has an overpayment from 04/05 of nearly £1500 (which I am still hoping will be voided soon). I wrote to them and requested that under the circumstances, as she has no other income, they should only recover £3.00 a week.

She got a call asking her to contact the recovery section to fill out an income/expenditure form. We had to do this over the phone as sending in one was not acceptable. My colleague said that that was so that they could argue your expenditure down - I thought that was too cynical! So today the client and I rang them together. The person on the other end felt that the expenditure figures we gave were outrageous and he would not accept them. He decided that because she was not repaying any other debts she could afford to repay £15 a week. I tried to argue that the guidance says they will recover a maximum of 10% and this figure was now more than that. I even read it out to him from the Putting Things Right; How to complain leaflet. He said the guidance did not apply in this case because it was "a crossyear recovery". I then asked for this decision in writing so that I could officially complain and he told me that I could complain to the Tax Credit Office but his decision was to deduct £65 a month and that was what would happen.

The whole thing was outrageous. He gave me no indication of what guidance he was using to tell me that the amount I gave was too much to be considered reasonable. He just kept arguing that this was too much in his opinion and that he would only accept it with sight of receipts. He kept stating that she had over £200 a week in benefits coming in and no other expenditure except food and daily living so could therefore afford to pay £15 a week towards this overpayment.

Does anyone know why the 10% maximum should not apply in this case and isnt that fact that even this deduction would take the family below basic income support levels enough to argue hardship?

Just realised I put the wrong leaflet up there. I meant - What happens if you have paid too much tax credt: COP26 p6. Shows what happens when rage gets the better of you.

I have had a couple of run-ins with the debt recovery unit as well. Yesterday they were insisting I disclose the value of my client's property and the outstanding mortgage balance and also the registration number of her car. I declined to supply any of this information and eventually, my client with a monthly income of £1700 between herself and her husband were asked to pay back £2500 overpayment at a rate of £18 per week. (When the client had initially called herself they were insisting on £205 per month payments).

I have other clients in similar position to yours (ie. on IS and CTC) and they are paying back at a rate of £5 per week, so I don't know why they are insisting on £15 per week for your client. Have you tried ringing back and speaking to a different adviser? If there is over £200 per week of benefits, does this mean there are disability benefits coming into the household? If so, then ecxeptional expenditure in relation to the disability should be the same amount as the disability benefits income and should not be queried.

My reading of the regs is that only end of year overpayments are subject to the fixed percentage deduction rates. In year overpayments can (and often do) result in the entire weekly/monthly amount of tax credit stopping to recover the overpayment. However, additional payments may be applied for to avoid hardship. How successful these applications tend to be I don't know.

As I understand it the position is due to change in November this year to make all overpayments subject to the fixed percentage rates.

Regards
Paul

has she really been overpaid in the first place?

Thank you all for that. We are still in dispute over the legitimacy of the overpayment. She wanted to offer repayments in the meanwhile anyway (at a reasonable rate) and then it would be a bonus if it were eventually agreed that she was not responsible. She felt it was hanging over her head otherwise.

Just to clarify - the supposed debt is from 04/05 and the £200 ish is just IS,CB and max CTC for 3 children. We would have been happy with £5 a week and its great to know that that has been agreed with others.

This behaviour should not be acceptable, particulary if had I reached another operator I would have got a more reasonable response.

So this is a year end overpayment, she is on max. TCs and therefore the most they can collect (COP26) is 10%. To try and force someone to agree to pay more is outrageous.

Is the 2004/2005 overpayment from the same award as she is currently receiving?

The only thingI can think of which would explain your scenario is if the 2004/2005 overpayment is from a different claim i.e. She claimed and for some reason this claim ended, and then she made the new current claim. In this situation I don't think the COP 26 recovery rates would apply as it would be recovered under direct recovery.

An example I was thinking of would be a single claim in 2004/2005 which ended when she moved in with a partner (and lost entitlement to TC) thus an overpayment was created from this year (for some reason maybe if she didnt inform them of the relationship). The relationship then breaks down and she makes a new claim for tax credits (the current award). If this was the case I think the 04/05 overpayment would be subject to direct recovery and not COP 26 10% rule and therefore income/expenditure would be done as it would be a direct recovery case etc....

Just a thought which may explain this peculiar situation - if it is all an ongoing award and there is no break then I agree this doesnt sound like it is within COP 26.

Victoria

Does this mean that Mr Nasty was right?

The situation is that she was claiming as a couple with her husband who died in 04. Tax Credits claim that she did not inform them appropriately and they continued to pay as a couple for several months after his death. Our appeal on this is still in the ether. Her current claim was started as a single parent some months after his death.

Why does't COP26 apply in all recoveries? There must be loads of people who move in and out of relationships and have resulting overpayments.

Reading the COP26 leaflet carefully now I can see that they do state that an overpayment on a claim no longer in payment is collected differently but what they mean is as clear as mud.

But even if they do have the right to collect every penny of her benefit, the manner of the argument about what she can afford to repay was completely out of order.

He may have been right in not applying COP26 but he was utterly wrong in trying to get £15 p wk off someone living on a subsistence benefit. There must be a complaints procedure you can take this up through?