I have posted a number of time in this forum, with varying degrees of frustration over the last two years about the unfairness of HMRC trying to deny people their entitlements when they had claimed wearing the wrong hat.

For those last two years, we have been shuttling backwards and forwards to Ministers and officials; but at last we seem to be getting there.

In today's PBR there is the statement from HMRC as follows:

“For people who start living together or separate who report the changes late, HMRC will take into account what they would have been entitled to receive had they reported the change promptly in determining any overpayment from their old tax credits award. When calculating the overpayment, HMRC will offset any Tax Credit award they would have been entitled to had they reported the change promptly. This will start in January 2010. Further details will be set out later in guidance.”

We still have a little way to go with some of the fine print but I hope that we are going to see shortly the end of one of the major injustices in the tax credit system.

Well done for a successful outcome and for persistence in lobbying about this.

It's an indictment of HMRC that they took so long to concede the obvious absurdity of their position.

Is there any possibility that this could be backdated to cover those affected before January 2010?

Fri 11-Dec-09 08:24 AM by shawn

this is very good news. and how interesting that it has been announced, virtually hidden in plain sight, in the pre-budget report. imho, HMRC's overpayment recovery policy has been unlawful from the get-go, and is indefensible - hence no cases being allowed to go to court. i have no doubt that HMRC has come under sustained pressure from many and various sources - i imagine it all counts in the end, and i would be very surprised if the looming election hasn't focussed ministers minds to the point where they have seen the necessity of piercing the miasma of obfuscation and lunacy woven by this department, to peer into reality and the world of reason. i would like to believe that they have decided to put it right for the right reasons...: )

Despite the personableness of individual members of staff, for whom i have some sympathy, i have found it difficult to conclude other than that the organisational entity which is HMRC is arrogant, out of control and psychotically insane. i'm not surprised that there are websites on t'internets with titles like 'Tax Credit Victims', or even 'HMRC are *****'. it has been robbing tax-credit claimants for 5 years, as well as sabotaging the tax credit scheme and its important role in reducing child poverty. and although i'm happy that i can now drop one of my long-standing obsessions, i expect that we have a way to go yet...!!!

i can't help wondering whether Novitskaya v London Borough of Brent & Anor <2009> EWCA Civ 1260 (01 December 2009) had any influence on this policy reversal?

http://www.bailii.org/ew/cases/EWCA/Civ/2009/1260.html

this helpful decision supports a number of crucial principles which imo have application to HMRC as well as the DWP - i wont quote extensively, but a couple of paragraphs deserve an airing here - : ) -

>>>Social security legislation is enacted primarily for the benefit of social security claimants.>>> opening of para 10

>>>The holding on this point in Kerr is a reflection of the fact that the distribution of benefits is different from many other areas of civil law. It is concerned not simply with recognising rights or enforcing liabilities but also with sustaining members of the community whom Parliament has decided should be sustained through the welfare state.>>> para 25

see also paras 15 and 21.

This decision, like Kerr itself, is very welcome. It doesn’t imo reflect any new approach in the social security field, but re-affirms explicitly an older established approach, which has become eroded/corrupted by new admin and management systems, and IT methods (and corresponding loss of knowledge and skills) etc etc.

just in case anyone thinks i go too far with 'psychotically insane', i kid you not, i discovered yesterday morning that the phone number for HMRC Solicitors' Office has been withdrawn from the public domain!!! ( I needed a fax number - Ravi Low-Beer of the Public Law Project has put a lot of hard, and frustrating work in on this issue, and had drafted a complex LBA.) After about two hours of hapless googling, and telephoning around, HMRC, after interrogating me as to my purpose, eventually deigned to provide me with the fax number, but refused to disclose the telephone number, which really has been removed from the public domain.

to be continued, no doubt...

but three cheers for now! : )

Correction: and apologies - Tax Credit Casualties (not victims)

http://www.taxcc.org/

">>>Social security legislation is enacted primarily for the benefit of social security claimants.>>> opening of para 10"

but it isn't social security legislation, it's TAX legislation, which is totally different.

HMRC's mindset is what's wrong (as well as the legislation) since they are about tax, not social security.

my view has always been, nice idea, wrong department.

it's not a very strong 'but' imo, given the factual history of payments to working parents on low income, and payments for children up to the present time and on-going. (the migration of _all_ child allowances from income support has still not happened as planned.) in my view, the question 'what is the primary purpose of the tax credit act' is a most significant question to be asked, and answered, in any judgement as to the reasonableness, and lawfulness of HMRC's administrative policy on overpayment recovery.

i reached the same conclusion as CPAG which is helpfully found here-
http://www.cpag.org.uk/

i agree with you about wrong department, and feel that HMRC has amply demonstrated that it is so - they can't even talk about the issue in appropriate terms - they talk of 'giving' notional offsets, or the 'availability' of notional offsets, whereas an appropriate administrative policy (to give correct effect to the legislation) would 'take account of' underlying entitlement in calculating the amount of overpayment required to be repaid. the current policy effectively converts technical overpayments arising from what are essentially 'compliance' failures', in the strictest sense of that term, through disregard of entitlement questions, to an arbitrary and disproportionate tax. this amounts to a reversal of the payment direction, for which, as i see it, there is arguably no primary legislative support, and which results in injustice to the individual, and contradicts the Parliamentary intention in the enactment. HMRC has prevented legal testing of it's position, arguably by breaching Article 6, and the effect of its COP code, arguably breaches Art. 8 and Article 1 of Protocol 1.

this reversal of Dawn Primarolo's policy decision of May 2007, imo, drives a horse and coach through HMRC's policy position. i expect they will try to conjure something nasty about January 2010, but will they continue to be able to make it stick... ?

I'm all for being beastly to HMRC when they deserve it (quite often!). On this subject they have tried their best and it doesn't help when you have to reverse an old ill-thought out Ministerial edict in the process.

As to what is to be done with cases from the past that are still open and those which are "closed" we will have to see. Let's get something sensible and workable for the future in place without frightening the horses.

Incidentally, I'd speculate that 2010 will be the year when the remaining IS cases will be migrated.

John, i think you must be a saint for talking to them so patiently, without your head exploding! i don't know whether the truth about the ministerial edict will ever come out - i'm aware that the consultation group were informed of the outcome of the internal review which preceded it, but no explanation of the reasons for the decision was provided, and no information about what was taken into account in reaching the decision was given. i've tried to find out, and my FOI request was refused...

i know that HMRC solicitors were party to the the review, as were Debt Management, and as far as i can tell, wanted underlying entitlement to be considered because without it, overpayment decisions couldn't easily be defended in court.

the tax credit scheme was never intended by Parliament to raise revenues. it is an expenditure scheme. HMRC's overpayment recovery policy offends massively against any sense of social justice. can anyone really expect this epic fail to be covered up, with no public accountability? ... oh.. right...