I have no doubt that the benefit can be superseded to reflect a change in the liability and that overpayments can be recovered, but something troubles me about this.
If the council are actually recovering an overpayment for 50% of the CT whilst seeking payment of the same 50% liability (it can only be the same - not "the other half") then they are having their cake and eating it!
Look at this way:
The friend gets £1000, for example, in CTB and pays that towards the £1000 liability. Now the CT section say the liability was wrong and so they refund £500 to the friend who in turn refunds the CTB section for the overpaid £500.
In practice this should be a paper exercise so the friend never gets the £500, it goes straight back to benefit clearing the overpayment. So, the overpayment has been recovered and the CT section now bill the £500 unpaid liability to your client. If there is any additional overpayment recovery this should be challenged.
But I'm also wondering if the council has the power to amend the liability in this way. Joint tenants are jointly and severally liable for the council tax (so it is not necessarily wrong for the friend to have assumed 100% of the liability. I wouldn’t wager on this but as far as I can tell for CTB the law only refers to the claimant being liable. Therefore I can’t actually see that there is anything for the CT section to go an actually change and anything for CTB section to supersede. I’m wondering if there was a single occupier discount. If not, then the CT section already believed there was more than one occupier and if so, CTB was underpaid for the claimant.
A most interesting dilemma… But here’s a more interesting question: Would the liability have been amended if CTB was not involved. Is there a financial incentive for the council to take this action – benefit subsidy - when perhaps it needn’t otherwise do so…?
More questions than answers I’m afraid, but an interesting question. Good luck, Steve.
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