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spent most of yesterday getting head round a working families tax credit overpayment/appeal problem which started in 2001 - not easy because of the treasure hunt to locate amended legislation. client came to me in February - still no reply from IR.
this is the problem - couple with 4 kids - unemployed man starts work June 2001, is assisted by Jobcentre, who fast -track WFTC claim. Two months later, hits problems with child care arrangements resulting in 2 changes of circs -
1. Changes job for less hours and lot less pay (from £200+ down to £97).
2. Eldest child leaves household and goes to live with her mother, client's ex-partner.
Client goes back to Jobcentre to adviser who helped with fast-tracking of claim to find out what he has to do about WFTC.
Is told that WFTC is awarded for 6 months and is not affected by change of circs. He doesn't have to do anything. He accepts this - the official knows about WFTC, he doesn't.
WFTC renewal December 2000: is awarded an INCREASED amount due to lower salary, even though now only 3 children included. receives demand to repay overpayment of £1800 because "child left the household".
Immediately appeals. (January 2002) he mentions the jobcentre's advice in the letter of appeal, but his main point is this - the amount he is being asked to repay is much greater than the amount they received for the daughter who left the household - the Revenue want him to pay back the whole of the WFTC he received in the 4 months after the c/circs, and he feels this is grossly unfair. He would be willing to pay back the amount allowed for the child who no longer lived with him, but that comes to nothing like the sum the Revenue wants.
In appears he was misdirected by the jobcentre official, because his ex-wife claimed income support for the child returning to live with her, and overlapping IS or WFTC claims for dependents was one of the exceptions to the 'award continues unaffected' rule. It was a change which results in the termination of the existing award and the need for a new claim to be submitted, on the current circumstances.
If he had been advised to send a new claim to the IR with a report of the change in circs, he would then have been given a new INCREASED award taking account of the massive reduction in his earnings 4 months earlier than would have normally have happened, because that change was accompanied by the other change (in dependants + claim by another person) as mentioned above. If it had been just the reduction in wages, or if the child's mother did not claim for her, the advice from the jobcentre would have been correct.
To recap - Inland Revenue tells man he must pay them £1800 because daughter left household and he didn't tell them about it. Man scratches head in bewilderment and appeals. He takes getting wrong advice from jobcentre on the chin. He takes not getting an increased award of WFTC for 4 months on the chin. He is prepared to repay the amount his award notice tells him is allowed for child who no longer lives with him, since being paid for a child who is not living with him gives him some logic he can grasp onto and follow in the midst of the morass of (to him) incomprehensible rules, BUT he draws a line at paying the treasury more money than he could have been overpaid for the daughter who is no longer in his household. Who can blame him?
The IR reconsiderd their decision in March 2002. They ignored the part in his letter where he tells them (in his own words) that he didn't fail to report the change and he was officially misdirected by the jobcentre. They presumably realize that the wording on their overpayment demand (child left household)did not actually refer to a material fact, and was inadequately worded, and satisfy themselves that the decision was correct by checking that child's mother claimed income support. they don't clarify themselves in their letter to him very well, but tell him they have reconsidered the decision, and it is confirmed correct because ex-wife claimed income support for child. (read steve johnson's earlier post on overpayment recovery guide, and laugh/weep hysterically!) incidently, the overpayment letter makes no mention of sect. 71, the legal authority under which recovery is sought - as per usual now.
Thus they disposed of claimant's appeal.
Yes, they are still ignoring it, and as anyone here can surmise by the fact that i am dealing with a WFTC matter from 2001 in April 2006, there is a tale of woe in the intervening period, with which I could set blood boiling. Suffice to say, that whilst the Inland Revenue has obtained a court order for the £1800 it wants from client, he has been told variously that the Appeals and Reconsideration process has been exhausted, his appeal was refused, they have no record of an appeal after the issue of the reconsideration letter, and, it is now too late for an appeal. there has been a further demand for repayment of a tax credit overpayment - unexplained, and probably erroneous, and the financial hardship in the months when payments of all tax credits stopped wihout explanation, was sufficient to force couple to remortgage their home to keep their nose above the tide of debts - leaving them fearful of their ability to keep up with repayments since 2004, and the possibility of losing their home.
I have a mess to sort out, but that's not why i'm posting. the point is that the IR policy on treating what i call 'technical overpayments' - overpayments which are created by the complexities of regulatory requirements as opposed to overpayments involving REAL loss to public funds, remains unaddressed (or buried in an obscure and dark place). The situation with tax credits is much worse than with WFTC. Recovery is not under sect. 71, and there is no right of appeal, and it appears to be impossible to obtain explanations from the Inland Revenue of how overpayments are calculated, nevermind how they say they arose. There is absolutely no equality in arms.
i wasted some time yesterday trying to crack the da vinci code of regulation 13 of payments on account etc regs, and gave up. i've banged on here about the rumours of offsetting against T.C. overpayments, out of which nothing concrete has emerged yet as far as i'm aware. but it seems clear that there could be no support for a public policy of PROFITING at the expense of the lowest income groups from a system created to BENEFIT low income groups and to REDUCE POVERTY, by making that system incomprehensibly complex so that its users have to PAY the Revenue for any failure to negotiate that system in exact accordance with its incomprehensible rules. I am confident that there could be no support for such a policy, because it would be UNJUST and i believe that justice REALLY matters to people. People may be un-schooled and may be bamboozled, but still have a sense of justice, which can be affronted.
With all the powers at the Revenue's disposal, demanding money with menaces for not having a Ph.D degree in tax law will not be supported.
i don't think the Revenue has such a policy. but in NOT getting clear a policy of NOT SEEKING RECOVERY OF ANY AMOUNT WHICH IS NOT AN ACTUAL LOSS TO PUBLIC FUNDS this is the position which may be unintentionally reached, by default.
added to which, in designating 'technically' overpaid sums as overpayments, rather than calculating ACTUAL losses, the overpayment figures which get banded about in press reports are grossly inflated and misleading, making the Revenue appear even more incompetent, and making the government look bad. any attempts at solutions are likely to be reactionary to those factors, and miss the root causes. it's a lose/lose situation all round, and needs to be addressed urgently.
this is a fundamental point, before even approaching the question of what fairness in recovering sums ACTUALLY overpaid.
any comments?
jj
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