As far as I can see 'in year' top up hardship payments are made outside the statutory provisions. Therefore, under what power do IR have the right to treat them as overpayments under s 28 & 29 in the next tax year? If they have no statutory power to make hardship payments they are not payments of TC and, therefore, they can't be overpayments of TC and IR has no statutory power to recover from award for subsequent year.

Just a thought! Comments welcome!! We are thinking of running this as an argument at appeal but we could be wrong!

When an in year potential overpayment is identified the revenue has discretion whether to amend the award to reduce or eliminate the overpayment (TCA 02 s.28(5)). In other words it does not have to. If it chooses not to my understanding is that this is what is known as top up awards but it is still a tax credit payment and therefore still contribute to an overpayment overall.

My understanding is that if there were no statutory power to pay top up payments then they couldn't do them so lets not push that argument!

My understanding is that there is a difference between top up payments and harship payments. Top up payments, which the IR refer to ac 'ATCPs'- Additional Tax Credit Payments, are made by the Tax Credit Office. Theefore by defination these are Tax Credit payments and would therefore contribute to any overpayment at the end of the year. However, there are also hardship payments which are paid by local Inland Revenue Offices. In my experience (albeit fairly limited in this area!) these are always referred to as hardship payments. So maybe there could be an arguement that as hardhsip payments are not payments of tax credits these cannot contribute towards any overpayment.

Although I think Andy makes a good point. It is often, sorry make that ALWAYS, difficult to get either Top up payments or hardhsip payments, so it might be worth thinking twice before doing anything which could make the IR even more unwilling to make such payments.

I understand your points. In effect an 'in-year' top up / hardship payment is a decision not to (fully) amend an award under s28(5) to prevent an overpayment occuring. In other words a decision by IR to allow an overpayment to occur. Obviously it helps our clients in the short term but.....

The IR seem to have used / still us various terms (even in COP26) for the same thing all adding to the confusion about what is actually happening.

It seems to me the issues around TC and especially potential / actual overpayments raises similar issues for advisers that were argued on introduction of the Social Fund - how far should we co-operate with the system? Arguably by going along with 'top up' payments etc etc it helps mask, and delay reform, around the issue of overpayments, the lack of appeal rights, discretionary nature of decision not to recover where hardship / official error etc shown.

I'm sure many advisers have the problem of 'official error' or other o/p's amounting to £K's where IR refuse to exercise a discretion not to recover because 'claimant should have known because it is clear (sic) from the award notice that we had not taken your partners income into account (or similar). With no effective (and certainly not quick) way to challenge these situations maybe it's time to be more 'aggresive' in our approach - short term pain for long term gain?