Following on from the posting about offsetting notional awards, I'd be grateful for any suggestions or opinions re the following:

Client is lone parent who had been receiving CTC & WTC including childcare element. Client ceased work but failed to inform IR resulting in substantial overpayment of WTC & CTC. TC award terminated from date client ceased work on basis of change to childcare costs. Client has significant mental health problems (hence reasons for both leaving job and failing to inform IR of change in circs) and due to this plus associated financial issues think there is fighting chance of persuading IR to use discretion not to recover. However, as there is no guarantee of success, point is client's entitlement to CTC would have increased to maximum from date ceased work had she reclaimed at this point and notional entitlement offset would significantly reduce existing overpayment. Is there any way of progressing this? If so, how?

There is no off set provision in Tax Credits. In similar cases I am aware of, the IR seem to go into Dalek mode, and say they cannot take into account the value of claims that have not been validly made. It makes you appreciate how wonderful reg 104 of the HB regs actually is!

The IR compliance manual (all 3 kilos of it) does refer to "set off", but for the IR, this means setting of a previous WTC and/or CTC overpayment, from an ongoing WTC and/or CTC award etc.

You also raise the whole issue of tax credits and mental health. Seems clear to me that the IR are not experienced at dealing with people affected by mental health problems, unlike other benefit/income deliverers. Very big social policy issue here!

Steve

Yes- quite agree re social policy issue, Steve. Greentop winging its way to Citizens Advice as I speak!

I didn't think there was any offset provision but having seen J Fourier's posting about notional entitlement wondered if I'd missed a new development. Thought it sounded too good to be true.

Will in the meantime carry on with request for discretion not to recover.

Hold the front page. Have spoken to CPAG for the latest. The IR compliance staff may shortly be given ability to effectively use off set type processes on a discretionary basis, in order to calculate the OP (only "deserving" cases?).

The alternative would be a change in the law used to calculate the OP. This could be achieved by tweaking section 4 of the TCO, effectively allowing retrospective claims based on the actual facts, or else introduce a version of reg 104, as discussed earlier. This, of course, would be brilliant, but to me is entirely contrary to the IR philosophy on overpayments to date, which only recognises valid and actual claims.

CPAG are taking this up.

Steve

Thanks, Steve. Will be interested to see what develops.