Help! Have client who is no longer in receipt of WTC after redundancy but council are using WTC figures in calculation. Overpaid WTC being deducted from CTC payments but council using previous higher CTC amounts in calculation. On payments actually being made client should get full HB/CTB but using previous income figures they are getting huge shortfall, therefore arrears have accrued, eviction a real possibility.

Council are taking tax credit award figures for year and dividing them by 52. They say this is the way it is done. It doesn't seem to matter that clients don't actually get the money and can't pay rent.

I pointed out DWP guidance that 'it is the amount in payment to the claimant that must be used in the HB/CTB assessment' (para 304). Council say they are doing it right. Have I misunderstood the guidelines?

I think I remember someone mentioning on the old forum that they were arguing with their council about this. Did you get anywhere? Does anyone have the relevant legislation I can quote rather than guidelines?

Any thoughts on this gratefully received.

I dont think you have misunderstood the guidelines at all. The Council are at fault.

I would suggest that there is an alternative argument in that there has been a change of circumstances that has retrospective effect, ie the Tax Credit entitlement changed from the day the IR has determined.

If that is the case then there should be a retrospective superssession of the HB award to take into account the lower TC entitlement.

You may find Leeves v Chief Adjudication Officer provides some support

have been talking to the council again and they are convinced they are applying regs correctly. apparently is in HB regs that this is how they make assessment (take year award and split over 52 weeks). They said that the guidance I referred to relates to where people have a notional entitlement but don't bother claiming - ie they can't put that someone is claiming if they are eligible but don't claim.

if anyone has any proof that the council is doing things wrong, please let me know!

The Council is broadly correct in how it assesses tax credits as income - but (in my view) completely wrong in the conclusions it has apparently drawn from the guidance about what to do when tax credit entitlement changes. They clearly should not be taking tax credits into account as income when they are not being paid. Here is para 304 of the HB/CTB Guide to Tax credits -

"Action all notifications of a change of circumstances as usual. However do not anticipate changes to the rate of a tax credit in payment. Do not use notional amounts - it is the amount in payment to the claimant that must be used in the HB/CTB assessment.
And it is for the claimant to notify you of any changes in the award but please see para 12 for details of the helpline number if you need to check a revised amount."

The phrase "do not use notional ammounts" is in bold type, by the way.

they are saying that 'do not use notional amounts' means don't count them as having applied for tax credits if they never applied but are eligible. council say they have HB regs that confirm they are doing it right - hopefully will be sending me a copy.

please if anyone knows of a council who are using a different method, could you get in touch ASAP. my clients are facing possible eviction because of the shortfall in HB and subsequent rent arrears (private landlord).

It might help you if you could access the message boards on hbinfo.org. There is a tax credits forum covering a number of issues that LA staff themselves are facing. It might illuminate things.

Also, apologies if it's obvious but when dealing with the LA, ask them the provide the LEGISLATIVE backing for their decisions. The Tax Credit Handbook is GUIDANCE, not law (and contains a number of inconsistencies anyway)

I think the local authority are wrong and that the relevant reg is 33(2B) of the HB Gen Regs, which is stuck in there by ammendments from The Income-Related Benefits and Jobseeker's Allowance (Working Tax Credit and Child Tax Credit) (Amendment) Regulations 2002 (SI No 2402)which is in the toolkit bit of this site.

It reads "Subject to paragraph (2), where the claimant receives payment of a child tax credit or working tax credit in respect of a particular week, the ammount to be taken into account under paragraph (1) shall be the actual ammount of such payment received." So if the ammount they get paid is nowt they should be assessed as getting nowt.

It would help if they put references to the regs in their guidance.

Unfortunately the regulation quoted was repealed before commencement (Sch 4 para 6 of SI2003/455).

I had just found that regulation and was thinking everything would be straightforward - not happy to hear it was repealed.

Was it replaced with anything?

I have visited the hb website you mentioned - there seems to be lots of confusion and conflicting advice from DWP.

I am currently awaiting a reply from LA regarding what regs they are using and have put in appeal in the meantime.

Unfortunately not.

As far as I see it, Tax Credits are not a Social Security Benefit so LAs shouldn't be taking the gross figure into account.

The way that I look at it would be by referring to HB Reg 24 - Average Weekly Income other than earnings:

"A claimant's income which does not consist of earnings shall.....be estimated over such period as is appropriate in order that his average weekly income over the benefit period may be estimated accurately but the length of the period shall not in any case exceed 52 weeks"

I would argue that the LA should amend the benefit award to take into account the reduced income in light of the above.

If the LA argues that they are using this regulation to determine the income, politely point out to them that the award is made for 366 days not 52 weeks (366 days = 52 weeks 2 days) and therefore exceeds the period mentioned in reg 24.

In my opinion.

thanks very much, that makes a lot of sense. Much appreciated.

I'm glad our HB/CTB dept hasn't cottoned on to this. Not every award of tax credits is for 366 days.

Might it be worth this chap applying for a Discretionary Housing Payment? It may also be worth asking the revenue to hold their horses on recovering the WTC until next year.

There is a relevant thread to this in the Tax Credit forum which refers to HB guidance and provides examples which suggest that your LA is doing the calculation incorrectly

LA have now accepted that were wrong to keep the WTC element as income when it was no longer being paid.

They say they are right to keep CTC at same amount because year award figure has not changed. This does indeed appear to be correct, following para 1509 HB/CTB Guide to the New Tax Credits Amendment 10:

"if the total amount due for the year for one of the tax credits has not altered
(shown on pages 1 and 3) do not alter the amounts being taken into account for
that credit, even if the amounts of the instalments have altered"

I guess this is in line with IS treatment of CTC recovery of OPs, where they still use the award figure.

Have applied for discretionary HB and also tax credit top ups.

Thanks for all your help on this one. Very pleased that the LA have seen the error of their ways.

Just a last thought though - how about the effect of HB Reg 24 (treatment of average weekly income other than earnings) as mentioned in earlier post - "the length of the period shall not exceed 52 weeks". Clearly the guidance is stating that a period beyond 52 weeks (366 days in this case) should be used in the calculation of tax credits. Isn't amendment 10 conflicting with Reg 24?

Well done!

The final paragraph really highlights the problem with Tax Credits. The way that the guidance is presented gives the impression that it is the law when it isn't. Social Security Commissioners have in the past criticised LA for relying on Circulars in their submissions as they are only guidance.

If in any doubt, go by the law (or get the LA to give the legal backing to their decision).