childcare costs for HB when not backdated

Good afternoon,

A client began incurring childcare costs, and notified the TCO, and began receiving the childcare element of the WTC from September 10. However, he neglected to inform the LA until December 2010.

The LA is (correctly) refusing to backdate the change, since a favourable change notified more than one month after change of circumstance cannot be backdated. However, they are backdating the extra tax credits received, as an adverse change is backdated to the date of the change of circumstances.

Presumably this is wrong, as eligibility for childcare costs is only one change and shouldn’t be artificially split up into a favourable change and an adverse one. The net affect of paying childcare costs is:

80% received from WTC. Income included in household income for purposes of HB and CTB.
100% disregarded from income for HB/CTB
Net Change 20% favourable change for HB/CTB.

Therefore, there is no adverse change of circumstances for HB/CTB because the entitlement to childcare costs is always favourable ot the claimant. The correct decision would be not to backdate the 20% net decrease in income, but not to split the childcare costs into a favourable change and an adverse one.

Am I right in this logic? The LA doesn’t agree (obviously) but I’d like to know whether this is worth appealing.

With regards

If the retrospective change results in an overpayment, the LA must reduce the overpayment by any underlying entitlement in accordance with HBR 104 (and its CTB equivalent).  This is mandatory, not discretionary.  Time and time again I have seen details of cases where LAs either don’t understand the relevance of HBR 104 or think its discretionary or are plain obstructive.

Underlying entitlement is an informal term to describe the reduction of an overpayment under HBR 104.  It comes into play where there is an overpayment but ACTUAL entitlement cannot be retrospectively awarded either because there is no legitimate claim on which an award can be made or, as in your case, where there is a legal bar to increasing ACTUAL entitlement.

In other words, the process *should* go something like this:

1)  assess ACTUAL entitlement;
2)  calculate any resulting overpayment based on “1”;
3)  where there is an overpayment, it must be reduced by any “underlying entitlement”.

Your client should appeal.