We have a client who has been receiving the Severe Disability Element of WTC who is in receipt of middle care rate of DLA and high rate mobility. Eligibility criteria outlined in CPAG, DRHB and CAB advisernet state only high rate care qualifies for the severe disability element. Upon calling the Tax Credits office they informed us that the SDE was paid on the basis of the high rate mobility component! We subsequently checked with another person at the Tax Credits office who confirmed that the high rate mobility should not have been taken into account. Apparently, they have made this mistake on several cases and were trying to rectify the matter.
Many claimants affected could be subject to overpayments, although Tax Credits should write these off in theory as it was their mistake.
Has anyone else experienced this problem or had an overpayment case because of this mistake?

We have had a number of overpayments caused by this error and the revenue has sought recovery. Unfortunately a lot of our clients do get confused between the rates and just think they are on ‘high rate’ without understanding the difference in components.

In my experience the error is normally caused by our client rather than HMRC. It will depend upon how they declared the income to the Tax Credit office. If they did it by application form when they made the original claim, they will have been asked at question 1.12 to put an x in the box if they get high rate care. If they did this then it is their error.


If they weren't in receipt of DLA when they made their claim and later phoned the helpline to declare their DLA then I assume the error would be caused by the HMRC and I would certainly ask for the overpayment to be written off.

Hi

We have also seen a number of these cases, and in all but one it originated from claimant error rather than HMRC error. Generally claimants have confused HRM and HRC, and consequently ticked the box on the claim form incorrectly.

I would recommend that you:
1. Obtain a copy of the original claim form (to see if the claimant ticked the HRC box in error)
2. Check the award notices. The award notice should say something like 'you are in receipt of higher rate care component' if the SDE has been awarded.
3. Check whether any subsequent phone calls were made asking about entitlement to the element.

If the claimant did tick the wrong box on the form or did not notice the incorrect award notice details then it is difficult to argue it should be written off. However it is not impossible so it is worth checking whether there was any reason why they could not understand the guidance notes, whether they were given incorrect advice by HMRC etc.

As far as I am aware HMRC did not check in the early years with the DWP regarding the Severe Disability Element, so there were quite a few cases where people were overpaid because of the SDE.

If there is any other error e.g. the element has been applied incorrectly by HMRC but not showing on the award notice then I would certainly request it be written off under COP 26 test. We would be interested in hearing about any case like this, so that we can raise the issue at the next Tax Credit Consultation Group.

Please feel free to email me: [email protected]

Victoria

You may also want to look at Case Summary 4 (Appendix 4) of the Adjudicator's Office latest report

http://www.adjudicatorsoffice.gov.uk/publications.htm


Victoria