summary of case - client seperated from wife over 2 years ago. wife moved out, client remained in home and was main carer of their three children. when wife moved out client submitted new claim for WTC & CTC as a single applicant. cl works a 3 pattern shift and required childcare at times overnight. childcare arrangements made didn't work out ( 1 child is autistic and can't cope with change - no one other than his parents has ever cared for him)so childrens mother stayed overnight once possibly twice a week to care for children while client at work. during this time mother provided some financial assistance eg clothes & shoes for children.

2 years later IR visited cl at home, interviewed him and decided that client should have claimed as a couple 'due to the long-term arrangements in terms of finance and care for the children'. TC award ceased and o/pymt created for over £9,500. client told settlement of o/pymt would be expected to be paid in full within 30 days of a demand. client told that IR would meet again with him and client would have to show evidence of applying for finance to settle o/pymt.

financial hardship due to cessation of TC's has forced client and wife back together after over 2 years seperated. client entitled to WTC & CTC now as a couple but will not claim.

another meeting with IR has been arranged for 2 weeks time with me present. anybody got any idea what's going to happen?
IR state that their aim is to resolve this matter!! call me an old cynic but is this meeting going to be a futile exercise? my client has just received a demand for payment within about 4 weeks or arrange to pay in 10 installments.
will recovery take place if we appeal against any final decision made?

Hi Rich,

From your posting, it appears that the IR are asserting an overpayment on the basis that your client was really part of a couple for a certain period. From the facts presented by you, this decision is eminently appealable. The tribunal would have jurisdiction, because the appeal would concern entitlement (which of course is affected by the overpayment action). You would not in the primary have to think about recoverability.

The IR appears to use Soc Sec definitions of what is a couple, as they make quite clear in the TC guidance manual. See http://www.inlandrevenue.gov.uk/manuals/ccmmanual/CCM6040.htm. I am aware that some say the IR's definition of a couple may be drawn from the underworld of tax law, but if so, why are they so clear in their own TC Manual that it is the Soc Sec definition that counts?

Assuming that it is the Soc Sec definition that holds, there is much useful case law for you to draw from, and argue as persuasive. I think these 2 adults are still married. If so, it all depends on whether they are in the same household. It would appear that the common roof was a matter of caring expediency, but was it a common household?

If you are too late for an appeal, try for an out of time appeal (reasonable prospects of success? Interests of Justice?).

I wonder if the IR would be kind enough to await the outcome of this appeal before recovering? You could always ask them nicely.

Not sure what you mean when you say that current circumstances have forced them "back together" - are they now in the same household? If yes and they decline to claim as a couple becasue they are not a couple, they should stop being in same household and claim independently, and then appeal if refused.

For all these reasons, the meeting you are due to have would appear to be premature, although it is clear from COP 26, that the IR are prepared to haggle on overpayments, so cases can be resolved quickly (and targets met?). How are you at haggling? Where do you start? ("my client is willing to offer £4.50, and not a penny more...")

Steve

Thanks Steve.
That was one of my main concerns whether IR use Soc Sec defintions regarding what is a couple. Providing they do/are we have several points that we can argue (and win - fingers crossed!).

From the coversation I had with the guy @ the IR I got the impression that they may be prepared to 'come to some arrangement' - haggling isn't much of a problem, but it's something that I don't feel is appropriate as I feel that my client was right to make a single claim. however my cl wants this over and done with and is prepared to agree to pay back the o/pymt if a considerable lower amount can be agreed upon.

P.S client and wife are now living together. cl did't want this arrangement because as far as he was concerned the relationship was over (been living apart for just under 3 years),financial hardship due to single TC award being terminated and the inability to keep the household running / detrimental effect this was posing with regards to the children have forced cl and wife to 'have another go' at the marriage - this was never an option before for my cl. they aren't claiming any TC's at present and state they never will again due to this and previous o/pymts - from my calcs they do have an entitlement but they don't want to know. the only way they can keep their heads above water financially is by working all the o/time cl can and his wife working 3 jobs. to say my client is stressed is a massive understatement!!

Thanks again

Hi Rich,

It is unfortunate, but inevitable, that some people will be put off from future TC claims, when this kind of thing happens. If it were possible to simply terminate a claim by letter, I suspect more may decide likewise.

On the settlement front, you could draw the IRs attention to the analogy of mortgage shortfall debt recovery, that was all the rage a few years ago. In many cases lenders, who had caught up with borrowers to recover large amounts, were willing to accept around 20%, in full and final. The IR might agree to do the same. It would be very interesting to get feedback from you on what is finally agreed in terms of settlement.

Best wishes and good luck!

Steve

steve

meeting with the IR is next week so I'll let you know the outcome. Thanks again for the info

rich

met with IR today. after our meeting they have decided to revise their decision and have agreed that my client was correct in making a single claim for TC's. claim will be re-instated and o/pymt cleared.

it appeared to me that their original decision made after their initial meeting with my client was based on a lot of assumptions. once these had been argued and clearly established it was obvious my cl and his wife were permanently seperated at the time with no intention of getting back together. from witnessing their line of questioning it's easy to see how wrong decisions are persistently being made - everything appears to be clear cut to them, no follow up questions being asked and no exploration into the situation - which I thought would have been vital if you are trying to establish if two people are a 'couple' or not!

IR had no comment to make about the distress, hardship etc their decision had caused my client and his family - but it was good to see him squirm when i pointed out the cock-ups they had made from day one of the claim.

if my cl decides to submit a fresh joint claim now, the guy from the IR has agreed to fast track the claim personally - what are the odds on him messing that up aswell!!

Hi Rich,

Very well done! The picture you describe confirms many fears expressed from the beginning of the tax credits scheme, as administered by the IR. Things will of course seem "clear cut" to authorities that are not used to being challenged, and it will probably take a long time, and many challenges, to address this.

Steve

This sounds appalling and very well done to you.

I believe your client has a very good claim for compensation for worry and distress under Code of Practice 1, together with expenses reimbursed.

Were the people at the interview specialist "tax credits consultants" or just Revenue compliance people with a tax background?

John

The guy from the IR was a 'claimant compliance officer' I'm guessing with a tax background. I'm certainly going to be making a claim for compensation for all resons you've mentioned. have already spoken to the Adjudicators Office .hopefully my client will receive more than the £40.00 (30 for worry and distress and 10 for phone calls) other clients of mine have received from the TCO - is this the usual amount people are receiving? hardly compensation for the stress, hardship, distress etc..... that's being caused !!

I've had one who got nearly £500 in all (including - from memory - about £35 for phone & other costs), but only after case went to Adjudicator. The payment was made up of several elements for various failings by TCO. However, I think it's difficult to compare cases without knowing a lot of detail.

In the Adjudicator's last published Report there is this example:

Conclusion

COP26 states that the TCO may decide that a taxpayer should not be asked to pay back all or part of an overpayment, if it arose because of a mistake by the TCO and it was reasonable for the taxpayer to consider that their payments were correct. Following lengthy discussions with the TCO, both about this case and the position regarding overpayments in general, the TCO agreed not to recover Mrs C's overpayment.

Unfortunately, the TCO could not finalise the amount of the overpayment until they had processed Mrs C’s end of year information. Nonetheless, they acknowledged that they had made several mistakes in their handling of the case, which ultimately meant that Mrs C was overpaid by approximately £1800 during the 2003/04 tax year. The TCO accepted that the conditions set out in Code of Practice 26 were satisfied in her case and agreed not to recover the £1800. They also agreed that, to the extent they had already recovered part of this sum, they would repay it to Mrs C.

Mrs C had clearly suffered considerable worry and distress as a result of the TCO’s actions and the subsequent delay in resolving her complaint. The level of this distress was apparent throughout our dealings with Mrs C and we asked the TCO to increase their initial offer of compensation. They had offered a total of £250 in recognition of the distress caused, but Mrs C felt this was insufficient, given the problems she had encountered.

The Adjudicator agreed that, in the particular circumstances of this case, the payment offered was not enough and she was concerned that the TCO had tried to link the payment of compensation with the concession not to collect the overpayment. She recommended that the TCO pay Mrs C a further £300, in addition to £75 that had already been paid, to recognise the distress caused and a further £20 in addition to the £10 that they had already paid to cover her direct costs.

A link to the Adjudicator's Office Annual Report 2004 is available via the following rightsnet news story -

Adjudicator\'s Office receives three-fold increase in tax credit complaints: Most upheld, and a proportion awarded compensation (24 November, 2004)