Hi all. This is my first use of the RightsNet site and first contribution / query, sorry if it's wordy, hope you can help.

I am handling a Working Tax and Child Tax Credit overpayment case.

In brief, both clients (husband and wife) are from abroad and subject to Immigration Control. When Tax Credits were introduced (it was not made clear that "Persons Subject to Immigration Control" could not apply and) the husband made an online claim for Tax Credits, Dec.03.

The husband had an NI number having done part-time work at the University for some years. His wife however, had never acquired an NI number. As a result of the online application, she was called for (a 1 hour) interview at the local (main) DWP / Social Security Office.
At this interview, it was made clear that both she and her husband were PSIC, as copies were taken of both passports, the wife was questioned as to why in UK, how long for etc...etc...
She was advised that there application (and everything!?) needed to be checked and that they would here in due course.
At no time was any indication given that they were not entitled.

A week later the wife received an NI number and a month later an award of both working and child tax credit was made.

Almost 20 months later, the couple were advised by letter that their claim was due to be checked by the local "Compliance Office".
An initial letter was followed by interview where all details were given / taken again. At interview my clients state they were advised that they shouldn't have claimed, that the Tax Credits were recoverable on the basis that my clients had received Public Funds, that now they could be facing penalties and interest (unless the £8500 was paid back immediately) and that as Public Funds it could affect their Immigration status.
In fear and panic the husband wrote a cheque for the full amount.

Then almost a week later he came to see me!

After a few days of info searching it became clear that something was amiss and so I advised the husband to cancel the cheque and I submitted an appeal. Funny enough the local compliance office, who had failed to return my calls, then got in touch!!

Accessing this site, I am left a little confused by the discussion threads on public funds, overpayments and appeals, for example:

Tax Credits are they yet public funds, if so, from when, if not, am I right in presuming that the compliance office need to come up with a better premis to recover?

My clients have at all times submitted full and correct information.

Having read documents COP26, COP27 and WTC4, it seems clear that there has been what we used to call "official error", and IR guidance says that recovery would not be actioned, further the penalties and interest that they were "threatened with" shouldn't apply, as there was no incorrect info, no fraud and no negligence.

Further to all this, my clients had used monies they had borrowed, to pay the overpayment, with the consequence that the husband may not be able to complete his doctorate (hence my advice to cancel the cheque), so failing all else, recovery will cause incredible hardship.

Reading the IR's own guidance the appeal seems straightforward, but discussions on this site suggest I am being naive in the extreme.

Has anyone had experience of a similar case or touched on any of the areas in the heading that may be relevant?

You are right that the appeal seems straightforward however it won't be! SORRY!

We've got letters to clients from Inland Revenue saying specifically that the overpayment arose due to their (IR) mistake but they feel the clients could have reasonably known they were being overpaid and asking for the overpayment back.

Also don't forget there is no right of appeal against the recoverability of an overpayment to IR regardless of whose fault it was.

We recently contacted the JCWI who told us that under Tac Credit (immigration) regs 2003 Statutory Instrument 653 tax credits are not classed as public funds.

We havn't actually looked at the regs - maybe you should to be on the safe side.

CPAG clarified with the Home Office in July 2004 that the list of what constitutes public funds has not been updated to include the new tax credits.

(see the rightsnet news story ...

@ http://www.rightsnet.org.uk/cgi-bin/forwardsql/search.cgi?template2=user_details2.htm&output_number=1&news.ID=71313256138)

The public funds list appears on the immigration rules area of the IND website (last updated Oct 2004)

@ http://www.ind.homeoffice.gov.uk/ind/en/home/laws___policy/immigration_rules/introduction.html

At a training session I was doing yesterday a client who has no recourse to public funds asked me if I could confirm whether she and her husband could claim WTC/CTC as the Jobcentre told them they could.
I told her that, as far as I am aware, she can't but having read these postings I'm now confused.

I'm nervous about advising her to go ahead in case she ends up with a huge overpayment which we cannot appeal. What do other advisers think?

think of it as a staged process -

• is the person subject to imm control? ... if not, then no problem
  
  
• if yes, do they nevertheless fall into one of the categories of people who can still claim the benefit/tax credit you're interested in?
  
  (provided for, for tax credits, by the Tax Credits (Immigration) Regulations 2003 (SI.No.653) available @
  http://www.rightsnet.org.uk/cgi-bin/forwardsql/search.cgi?template2=user_details2.htm&output_number=1&news.ID=1118-2103-30992)
  
  ... if not, then we're stuck
  
  
• if yes, is the benefit a public fund?
  
  
• if yes, is the person subject to a no recourse to public funds restriction? ... if not then there's no problem
  
  
• if yes, should they claim?

Shawn,

In the case of my particular client I'm assuming that, as the Jobcentre says she can claim, then the first few stages are satisfied (I will, of course, check this.)

Assuming that she falls into one of the categories of a person who
could claim benefits but for the restriction on accessing public funds my only concern is whether tax credits are indeed public funds.

Having read your links I am satisfied that they are not and, if given the chance to appeal a future overpayment decision, I am also satisfied a good tribunal would agree. But there will never be a good tribunal because there will never be a tribunal at all.

I guess what I'm trying to ask, albeit in a long-winded, just about to finish up for the Christmas break kind of way is, is it good advice to tell her to claim given that, if it all goes belly up, I can't help her out?

Hi Lorraine,

Tax Credits uses the same definition of subject to immigration control as does social security. Here is the tax credits manual link:

http://www.inlandrevenue.gov.uk/manuals/tctmanual/TCTM02100.htm

You will see that disentitlement on the gounds "public funds" is only one of the 4 ways within that definition that people are disconnected from benefit/tax credits. Your clients may well have been disconnected anyway because they may only have limited leave to be in the UK, but you would need to check this out.

So far as recoverability is concerned, you will probably discover that COP 26 is not much cop, and that the IR will recover anyway, if they can. Stopping the cheque was certainly one way of preventing recovery (at least inially), but my worry is that this action may in some way compromise future applications to extend their stay in the UK etc, if this is needed.

The problem is that many overpayments are directly attributable to official error, but this does not prevent in year or end of year recovery. We are told that only a few cases have resulted in non recovery, and than only if the Adjudicator has been involved (via the complaints route). Still worth using COP 26 as a stand alone challenge on recoverability, and/or as part of a complaint (thus eventually bringing in the Adjudicator).

One way of testing the whole entitlement issue would be to enter a formal appeal on the entitlement figure (assuming you are in time, or can access the late appeal provisions). This would ventilate the immigration issue once and for all, and give the figures to check the amounts.

Sorry this ramble does not suggest more of a clear path

Steve