Client was claiming IS for himself+family. When calculating income, an amount of CTC was taken into account. As an overpayment of Tax Credits was being recovered at the same time, the amount of CTC was in fact reduced by £40week. However, DWP had taken the "gross" amount when calculating IS..
Is this correct? ( as I understand that HB are required to take the net amount..)
The response from this particular Decision-maker is "we have taken into account the full amount...If we took into account the lesser amount...we would be compounding the overpayment and effectively paying it for them" -which doesn't sound like a legal definition to me.!

It's harsh but I believe they are correct (and I sought of see what your benefits contact meant although that is not much help either), if you check back through the discussion forum on Tax Credits you'll find various questions about this, plus a link to the code of practice and advice about tactics e.g. applying for top-up payments or querying whether the overpayment should be recovered at all.

You are right about H.B. though as they use the net figure rather than the gross. If you happen to have this years CPAG H/bk handy see pages 963/4


One related issue that I think is important is that people who lose there jobs and get Working Tax Credit really should report the change of circs straight away, even though they don't have to. Otherwise the WTC counts as income against there benefit claim but is subsequently recovered from them. However there JSA or IS is never increased to take account of this deduction.

Sorry for all my spelling mistakes above (even though it is Friday I'm not yet drunk).

Anyway I thought you may find this helpful

reg. 40(3) specifically says:

“Where any payment of benefit under the benefit Acts is subject to any deduction by way of recovery the amount to be taken into account under paragraph (1) shall be the gross amount payable”