Here is a link to the new COP 26, which includes the new overpayments recovery criteria. Its been just like waiting for the new Ian McEwan to come out.. will it be as good as Atonement?

http://www.hmrc.gov.uk/leaflets/cop26.htm#2a

Steve

Good cop, bad cop?

cop out?

cop-ulation elsewhere?

I've just sent the following questions to our organisation's TCCG liaison. But perhaps someone here already knows the answers?

Will the new version of the COP26 apply to overpayments only that arise from the current year on, or will it now be applied to all overapyment disputes currently in the system as well as any new ones, regardless of the year in which the overpayment occurred. And, if the latter is the case can any client who has previously had their dispute rejected under the "reasonableness" test now dispute the overpayment again based on the new COP26?

I think they will probably refer my honourable friend to a reply that could be summarised in the terms immediately above...

I don't know the answers to bmenacabdm's questions, but on grounds of fairness (!) I think the new code, which requires lots of reading of notices etc, should only be retrospective to when the Revenue started to get all tough about claimant reading responsibilities, which was in about April 2006, I think. But I bet they run the new code for all challenges from now on.

On the second question, I think there is no limit to the number of challenges on recoverability. Such challenges are not formal revision requests, they are simply requests that the Revenue don't do something they can. I reckon the change in write off criteria might be a very good reason to have another go, if the new criteria helps.

Although the new code may help in some cases, I have worries for that very small number of claimants who are not totally familiar with tax credit award notices etc - how do you know something is wrong, if you don't understand it anyway? Not everyone is able to admit they don't understand. Also, notice the requirement for claimants to monitor actual payments after receiving an award notice. They have to do this for 4 weeks, and report any mismatch between the award notice, and the payments - I thought the Ombudsman said it was wrong to regard claimants as system police.

Hardship write offs? - yes, they are in the new code, but you have to read right to the end of it (in this sense the old code was better), and still no reference to the 'H' word (hardship) in the TC846 form - is it going to be amended?

Don't hold your breath

Steve

Update!

My colleagues at CPAG have spoken to HMRC, and have been advised as follows...

The old test will still be relevant if a client has already disputed an overpayment and had a decision from the Revenue and is now disputing it further. The Revenue would then check that they followed the old guidance correctly in making that decision. Any disputes from 31 January, whether already in the system or not, so long as no decision has yet been made on it, will be under the new guidance...

Steve

Their example 1 says: "On 1 September you tell us about a change in cicumstances but we don't change your award till 16 October. We won't collect back any overpayment that arises AFTER 30 September."

This means they will recover an overpayment that has built up due to their (and no one else's) delay in changing the award.

Is that other people's reading? I am happy to be disabused!

Unfortunately you are right Clive. HMRC have given themselves a 30 day period in which to action changes of circumstances. They will only write off overpayments after 30 days have passed.

So if you tell them the day a change occurs but they take 29 days to process it, you will probably have an overpayment despite the fact that you could do nothing more.

LITRG (and other voluntary sector representatives on the Tax Credit Consultation Group) strongly opposed this - see the news story we published when COP 26 was updated: http://www.litrg.org.uk/news/index.cfm?id=491

Victoria

The new COP 26 refers to a number of scenarios, in explaining when an overpayment may or may not be recovered. If the claimant fulfils all their responsibilities, and the Revenue fails theirs, no recovery etc. If both sides fulfil, it looks lke there will be a recovery.

However, surely the most likely scenario is that both sides fail to keep all their responsibilities (if the last 5 years is anything to go by). Then, the code says the Revenue 'may write off parts of an overpayment'

What parts? How is this partial write-off calculated?

From this standpoint, I am wondering whether we might have been better off with the old 'reasonable belief' test. At least if you won this, you knew all the overpayment would be entirely written off.

What do you think?

Steve

Completely agree
As you read through the 'responsibilities' you wonder, 'yes, but what about when they both fail?" Their explanation inevitably falls back on ... discretion

Presumably they have thought about it and decided the new system will reduce the discretion and scope for arguments. But will it? Even in the responsibilities list, there will of course, be arguments about e.g. whether the claimant notified them, whether they accurately recorded what they were told etc.

Once again, this all means long drawn out problems and arguments but what about claimants who do not challenge or get help?

Thu 21-Feb-08 12:44 PM by Victoria Todd

We raised the issue of determining whether the responsibilities have been met. In a lot of the cases we have seen that has been the most contentious issue - the evidence of whether the claimant did in fact notify of a mistake etc...the problems around this remain in the new COP 26.

On the issue both sides failing in their responsibilities -my understanding is that if you have established that both sides have failed and there are no extenuating circumstances for the claimants failure then you would consider:

(a) whether the claimant informed of incorrect information and at what point they did so
(b) whether HMRC delayed processing any changes.

Depending on answers to the above then the overpayment would be reduced, but the remaining amounts would remain to be recovered. At least that is my understanding.

Victoria

Thanks for that clarification but are these details going to be in other guidance? And, did they say what the "extenuating circumstances" might be?

Thank you
clive

Hi Victoria,

What a mess. Under the scenario of mutual failure to keep to all responsibilities, the two factors you describe (whether change is reported, and date of action after the date of report), are relatively unambiguous. But what about failures which are more debatable or unclear?

For example, on the Revenue side, it might not be agreed they gave the wrong advice to a claimant. Another example is their responsibility to use information accurately. We may argue that the claimant cannot tell if this has been done, if the Revenue fail to properly explain how their overpayment figures are arrived at. On the other hand, the Revenue seem to believe their notices are clear.

On the claimants side, they have responsibilities to complete the claim form accurately, but the Revenue's absurd definition of married or registered couples means that it is easy to claim you are single, when in Revenue land you may be a couple, and vice versa. Another vague area of possible error is reporting changes of circumstances. What is the status of a non report of a non mandatory change of circumstances? Is a claimant risking a finding that they have failed in their responsibilities, if they fail to report something they are not required to do? In the new COP 26 they say they 'recommend' you report an income change. So, is failure to report something you don't have to report nevertheless a breach of 'responsibility'?

I think it is inevitable that we will come to different conclusions to the Revenue about the appropriate weight such breaches should attract. So the Revenue identify a £2,000 overpayment. There is then an argy bargy about respective responsibility breaches, and it ends up with the Revenue reducing the overpayment to £1,700. What do we do then?
How do we know whether to leave it there? I think Adjudicator is going to need a larger letter box.

Steve

Thought you all might like to note/be aware of the following.

I submitted a complaint to the Adjudicators office in September 2006 (yes, that's right - two thousand and SIX), after exhausting the complaints procedure. I received the Adjudicator's report yesterday.

They place a great deal of emphasis on the REVISED COP26, to - IMHO - the detriment of the claimant.

I'm recommending the claimant continue to the Ombudsman.


Has anyone got hold of any documents to back up what Steve (via CPAG) says in his last post of 1 Feb?

HMRC have today published another new version of COP26 @

http://www.hmrc.gov.uk/leaflets/cop26.pdf

Anyone know what the changes are?
Clive

Clive

I have done a quick run through comparing the Jan 2008 and new edition of COP 26.

There doesn't appear to be any substantive changes, mainly a lot of rewording and formatting it seems.

The only addition of interest I noted was that when referring to couples separating and the fact that HMRC will accept 50% from each, they have added 'within 30 days' at that point.

If anyone else does pick up on any changes or problems please email me and I will feed through the consultation group.

Thanks

Victoria
(LITRG)

Hi all,

With reference to the new COP26 (Jan 08 one and the latest one), my understanding is that the version of the code to be applied depends on the date of the Revenue's decision (so, for example, if the decision is before the date the new COP26 came out, the old code applies?)

Has anyone got any ideas about how the date of the Revenue's decision is determined? Is it the date on the first award notice to show the overpayment?

I ask because I'm seeing quite a few clients with 'revived' overpayments, where they had been told in the past the o/p had been waived, only to receive letters more recently stating that an o/p still exists and must be recovered. Which date would apply? The clients have been sent the Jan 08 COP26, which was very confusing for them, especially where the overpayment had arisen due to an income rise from one tax year to the next (as the new code refers to the £25,000 disregard between tax years, but their o/ps occured when the disregard was still £2,500).

Can we argue that the old guidance should apply because that is when the o/p arose? Or does it have to be the date of the Revenue's decision - and if so, which decision??

Hi Rachel,

I share your confusion, especially since in my view, the old the COP 26 gave better opportunities for some claimants to avoid recovery.

The first issue is the date of the decision, and I think you are right to base this on the first award notice that comes along after an award is adjusted because of the overpayment decision.

So far as which vintage of COP 26 is concerned, I think that the fairest way would be to identify which code was operating at the time the overpayment arose. I suggest this because I predict that the Adjudicator/Ombudsman might go along with this, if the case had to go that far. Otherwise, it would be very unfair to retrospectively impose new codes of claimant behaviour into past events, since it would have been impossible then for claimants to know by what standards their behavior would be judged in the future.

I recall something about the Revenue saying that would not want the new code to be used on cases decided against the claimant, when the old code had been used.

Having said this, if you have a case that is clearly more arguable by the new code (responsibilities), rather than the old (reasonable belief), then I guess nothing prevents you from trying the new code, subject to the prohibition mentioned above.

Hope this helps.

Steve

HMRC have told us through the TC consultation group (TCCG) that the relevant point is when the dispute decision is made.

All new dispute decisions made on or after 31st Jan should have the new test applied.

The old reasonable belief test will apply if they have already made a decision pre 31st Jan 2008 under the reasonable belief test, and the claimant is not happy with it. When the claimant asks them to look at it again, they’ll be looking to see if they made the decision correctly and therefore applying the old test.

We are hoping to have a meeting with HMRC to look at how the new COP 26 is working in practice.

If anyone has examples of cases that where they think the old test would have been more successful, please feel free to contact us via our website.

Victoria
(www.litrg.org.uk)

We've had a couple of very old cases decided using the new COP 26 - the decisions for both have definately been pre 31st Jan 2008 - one went back to 2004.

We're not complaining as it's meant we've had two very large overpayments deemed non recoverable as a result of the new guidance being applied.

See my post in this thread of 15/4.