We have had a number of clients who have recieved letters from the Inland Revenue apologising for their mistake, while asking for the amount to be paid back. I am aware that if you can put a convincing argument forward, to prove that you were unaware of the mistake, then the debt can be written off. Not sure how this works and what can be considered a reasonalble argument.

Is there anyone who has been successful? and what situation works for this purpose? Also,I wonder if this differs in different parts of the country

In reply to the point Semitone raised. I have had 3 clients in the last week who have requested the IR pro forma TC846, so that they can apply to have the recovery waivered in their case.

One of my clients gave up her job and after informing the IR her change in cicumstances she was awarded WTC based on her husbands salary. This award amounted to £40 a week. I feel that this was a reasonable amount and the IR statement confirmed that the amount was correct. (since proved to be wrong) When the form arrives we will need to put a case forward that says it is reasonable to accept that the award was correct. Also, it would cause financial hardship to the family to have to pay back the over payment. We are going to complete the pro forma TC846 and hopefully have the overpayment waivered in this case, fingers crossed it will work.

This is from an article I did recently in case it's any help.

The way they use discretion is governed by their code of practice on the recovery of overpayments (COP 26). This has recently been revised to include information on adjusted payments, arrangements for 2004-2005 and cases where they will and will not make higher payments (which means recovering an overpayment more slowly). They may use discretion in the following circumstances:

 Your client was overpaid because of a mistake by the Inland Revenue and it was reasonable for them to think the award was right, or
 It would cause hardship to your client or their family if they had to pay the Tax Credit back. The Inland Revenue may also accept payment over a longer period in a case of this kind.

The guidelines seem simple and straight forward at first. It is only when I began to put a case forward that I relised it is not too straight forward at all. I struggle with; how can you prove that you belive the award to be correct?
Surly you would expect the IR to get it right. Where do you draw the line, when you have such a big grey area. After all, this is a new benefit, paid in a new way. Only time will tell what works.

The form to ask for your case to be considered, does not give the opportunity to explain hardship. I have just added it any way.

I have 2 cases where I have helped clients complete the 'remissions form'. One went missing so we had to send a duplicate. I have not had a reply to either yet.

I am not aware of any case so far where anyone has had any amount of TC overpayment written off. I would be interested if anyone is aware of such a case.

I also have two cases being considered, I believe we will have a lot more. Good luck, let me know if you have any success.

Debbie

In the absence of even the possibility of getting the matter before a tribunal, we will not have case law. In the struggle to deal with the IR in this area of discretion, why not refer to HB guidance and case law (reg 99 of the HB regs refers to official mistakes and claimants not knowing etc). Here is a clip from the HB overpayment guidance:

“2.97 A number of questions need to be asked when reaching a decision, such as
 from the information the LA has provided, could the claimant have known that an overpayment had occurred?
 did they receive the decision notices?

2.98 This can be a difficult decision to make. Consider if the claimant
 is aware of the change of circumstances that need to be notified to the LA?
 has fully read the decision notices?
 would expect a change in the amount of benefit, having notified the LA of a change in their circumstances?
 would expect an overpayment to occur if they had previously had a similar change, which caused a change in the amount of benefit they received?

2.99 The following circumstances, could result in the claimant not realising that an error had occurred
 it is unlikely that the claimant would have such detailed knowledge of the HB/CTB scheme to realise that, eg gross income and not net income was used for a non-dependant, in the HB/CTB calculation

 the claimant would be unlikely to realise that an LA had not processed a change of circumstances, if it coincided with a major scheme change and/or rent increase

2.100 'Reasonably expected to know' can be interpreted in the claimants favour, if
Reg 99 HBGR
 you consider, because of the claimant's age, intelligence, (eg can the claimant read) or mental condition, that the claimant was genuinely unaware of the official error overpayment
Reg 84 CTBGR
 the claimant states they were wrongly advised by an official source; however, the onus of proof will be on the claimant. In such cases, a statement should be taken from all parties concerned and then the evidence will need to be considered and a decision made on the balance of probabilities

2.101 In some cases, an overpayment may need to be split into different classification categories, ie part attributable to 'official error and part claimant error'. In these circumstances determine at what date the error transferred from being the responsibility of one party to the other.
2.102 If, after all these factors have been considered, you are satisfied the overpayment occurred due to official error and the claimant could not reasonably be expected to realise they were being overpaid, then the overpayment should be categorised as 'unrecoverable', these may sometimes be known as 'mandatory adjustments'.”

In addition, there is some useful HB case law. CH/2227/2002 confirms that the test of reasonableness must be seen in the light of payments being made, and/or notices sent to relevant persons (IR notices are famed for their clarity!).

It may be reasonable for a claimant to report a change and assume therefore that all is well with their claim. In terms of reporting changes, CH/4065/2001 concerned a claimant who telephoned the LA to query their award of HB, and was told it was correct. An OP developed. At appeal, the LA stated there was no record of the phone call. The Commissioner took the LA to task, and questioned the efficiency of the operating systems.

As you are probably aware, the whole business of the continuing duty to report changes is a bit of a mess. It came up in CH/2888/2002, when the LA took 6 months to act on a change reported by the claimant. In the meantime, the HB did not change. This led to an OP that the LA decided was recoverable. The Commissioner decided:

 The LA had made a mistake

 The claimant did not contribute to the mistake

 However, the claimant could reasonably know about the mistake. The Commissioner stated that the claimant must have known that the change of circumstances (a rise in income), because he notified in the first place (and his wife phoned at a later point)

 The Commissioner decided that the earlier tribunal had erred, possibly because they assumed that they had been applying social security case law, where the “chain of causation is broken once a change has been notified”. The Commissioner said that HB/CTB law differs.

Getting the IR interested in case law that does not apply to Tax Credits, in a situation where they hold all the cards because of their discretion, will be difficult, but the help is there for them.

Steve

Thanks Steve,

this information is really useful. It will remain to be seen if the IR will use this to set resonable guildlines to make a decision. With no case law, is it fair to rely soley on the descretion of a decision maker? Luck seems to be the major part of having an over payment being written off. Then who says the benefit system has ever been fair. I better stop before I become too cynical

Debbie