My apologies if this subject has been well aired already - I've not used the forum for a while - but it's the old chestnut of 'reduced' TC awards being treated for IS purposes as gross income before 'overpayment deduction'. This, of course, leads to the all-too-familiar situation wherein a non-working claimant has had their IS reduced for several months by the value of a WTC award that should never have been made, only to see some months later the WTC 'overpayment' reduced or eliminated, thus in some cases wiping out their CTC altogether. The IS Sec then treat the person as receiving the amount of CTC they would have received were it not for the O/P 'recovery', which is, in effect, the claimant paying back the excess TC twice.

I'm assuming that the IS gang treat CTC 'reductions' this way under the provisions of IS (Gen) Reg 40(3) (I tried to find out by phoning my local IS office, but 'senior staff don't have the time to discuss it', I was told - and it's such a 'heavy political question' that non-senior staff wouldn't touch it with a bargepole). Now, Reg 40(3) is obviously the reg that would have been used for other soc security benefits; but the 'double whammy' effect would have been ameliorated in many such cases by the amount of benefit overpaid being offset against the amount of IS already paid. It doesn't appear that any similiar offsetting is available to the TCO, which leads to reg 40(3) not operating fairly, as described above.

Here's my point, and my question: can 40(3) be used in in respect of TC payments anyway? Firstly, it only applies to benefits 'payable under the benefit Acts' (which, unless there's been an amendment I'm not aware of, are benefits under the Contributions and Benefits Act and the Jobseekers Act, not the TC Act). Secondly, even if TCs come within its rubric, is the TC award which is amended with a view to 'reducing' or 'eliminating' a *likely* overpayment really making 'a deduction by way of recovery', given that no final decision has at this point been made on the TC claim and no definite overpayment identified, nor can it be until the end of the tax year?

Of course, I may be barking up the wrong tree here - as the DWP might not be useing Reg 40(3) at all - but your thoughts would be appreciated. Or, indeed, any other suggestions as to how to tackle the patently unfair situation where people on IS are being stung not once, but twice, because of TC overpayments caused solely by the Inland Revenue's own (in)actions.

TIA.

this is definitely an anomoly from what i can see. i went on a tax credits course in which it was stated that adjustments made mid year to "reduce/eliminate a likely overpayment" as you describe above -and which was also the terminology they used- are definitely not overpayments as such (nor underpayments if its the other way round)and therefore the regs about treatment of overpayments/underpayments does not apply to these, only to o'ps etc at final reconciliation. it looks to me as if it is definitely a case of dwp having their cake and eating itin their treatmnent of these adjusted payments. its either one thing or the other, either an adjustment, and therefore to be regarded as the current entitlement, or an over/underpayment, not both, otherwise like you say its counted twice. i think its this whole thing about a mismatch between annual awards and weekly benefits and someone a lot cleverer than me needs to have a good look at it. other than that i can't offer any suggestions but i wish someone would!