I have a clt who has been O/P HB/CTB due to a change in his income. The only change in his income was that his net pay went up as his tax and NI was reduced as he had been paying too much tax and NI. It was the Clt who queried this rate of tax and NI. On the claim form it does ask for his wage before tax and NI. As a result he didn't inform the LA of the change, as he believed he didn't have to, as his Gross wage was the same.
Also as the IR were deducting too much tax and NI then could he use the argument that an official body has made an error with his income and contributed to the O/P?
The other argument he could use was that as he provided his wage slips when he applied could it be reasonable for the LA to realise he was paying too much tax and NI?

Also does anyone else have any other arguments?

As far as I can see, a belief that you didn't have to tell the LA something, however sincerely held, does not stop that failure to inform being your error.

For the same reason I don't see how HMRC can be held responsible in any way for the HB/CTB overpayment. The claimant's failure to notify the change in his net earnings was what caused the OP, not the HMRC's miscalculations

The last argument, that the LA should have seen that he was paying too much tax/NI may have some weight, although I think it may be quite a hard argument to show that the LA should have second-guessed information provided in the form of payslips. Is the error in the tax/NI so gross that the LA ought to have realised that this guy's net wages would change?

Sorry, not very positive I'm afraid.

Our notifications do include a breakdown of assessment including Tax & NI shown as deductions. If his are the same it would be reasonable to expect him to understand the change may affect his entitlement.

Sometimes new employees are taxed on emergency rates, I would expect an assessor to notice the higher than normal rates as it could indicate a second job and so perhaps query it but more than that? Probably not...

Without commenting on the merits of the case, reg 100 of the HB Regs is in the following terms.

Recoverable overpayments
100. —(

(1) Any overpayment, except one to which paragraph (2) applies, shall be recoverable.

(2) Subject to paragraph (4) this paragraph applies to an overpayment caused by an official error where the claimant or a person acting on his behalf or any other person to whom the payment is made could not, at the time of receipt of the payment or of any notice relating to that payment, reasonably have been expected to realise that it was an overpayment.

(3) In paragraph (2), "overpayment caused by official error" means an overpayment caused by a mistake made whether in the form of an act or omission by—

(a) the relevant authority;

(b) an officer or person acting for that authority;

(c) an officer of—

(i) the Department for Work and Pensions; or

(ii) Revenue and Customs,
acting as such; or

(d) a person providing services to the Department for Work and Pensions or to the Commissioners for Her Majesty's Revenue and Customs,
where the claimant, a person acting on his behalf or any other person to whom the payment is made, did not cause or materially contribute to that mistake, act or omission.

(4) Where in consequence of an official error, a person has been awarded rent rebate to which he was not entitled or which exceeded the benefit to which he was entitled, upon the award being revised any overpayment of benefit, which remains credited to him by the relevant authority in respect of a period after the date on which the revision took place, shall be recoverable.

The key phrase is “the claimant, a person acting on his behalf or any other person to whom the payment is made, did not cause or materially contribute to that mistake, act or omission”.

It's the eternal question, isn't it? Did he know that they had cottoned on to the error and had they told him they would sort it by reducing the deductions from his earnings, or did he genuinely not know that his net earnings had gone up?

And whose "error" was it originally , or was it just emergency coding?

Is the employee a new employee? If so, I can't see how HMRC would (normally) be at fault.

The initial rate of tax & NI would be made by the EMPLOYER (not HMRC) based on the info given to it by the new employee. This normally occurs where the clmt is unable to provide a P45 promptly. On the face of it, any error would therefore be by the emnployer - not HMRC. Therefore, no official error (I really don't think it could be argued that an employer is "acting on behalf" of HMRC).

Even if the employee was in "ongoing" employment, the chances are that any tax / NI rates made by the employer would be based on HMRC info that was, in the first instance, given to them by the employer.

And, finally, even if it could be successfully argued there was a mistake by HMRC, an increasing number of CDs would strongly support a counter argument that the clmt contributed to the cause of the o/p by failing to disclose the change to the LA ("Sier" principles).

As an aside, I'm puzzled as to how an incorrect amount could be deducted for NI. This isn't averaged in the same way as tax. NI is normally specific to the earnings in a specific week (or month) and is deducted at the time with no "refund" if earnings are, on average, less over a longer period of time.