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the risk in dealing with HMRC is that they'll get you as yampy as they are, as they say around here. i am glad to see t these overpayments referred to as 'technical' overpayments here.
it's worth reminding ourselves...
the law hasn't changed, and remains section 28 - same as it ever was....
an overpayment is the amount paid in excess of entitlement. HMRC has discretion regarding the amount it recovers.
the overpayments in question are calculated by HMRC not by reference to payments in excess of entitlement, but by reference to non-compliance with section 3 (Claims). granted, section 3 throws a complication into the soup, but the denial of a right of appeal against section 28 decisions has meant that the correct legal interpretation of section 28 could not be challenged and tested before the Upper Tribunal.
HMRC's overpayment recovery policy is not law. prior to the change announced in the pre-budget speech, the policy of recovering technical overpayments without regard to underlying or 'notional' entitlement had been in effect, and reflected in COP 26, since May 2007, following an internal review and ministerial decision.
Prior to that, there was provision for offsetting notional entitlement against technical overpayments. The problem was, it was not being applied by general tax credit staff. Nor was it stated in the previous version of COP 26, and reference to the procedure was located in one paragraph of the Compliance Manual, which was not readily accessed by generalist tax credit staff, and regarded by them as the domain of specialist Compliance Officers, in the context of 'compliance' investigations.
as we know, 'compliance' is used as a euphemism for fraud, but it has a straightforward, matter of fact, non-derogatory meaning (non-compliance may be wholly innocent!!!). Compliance is a general issue for tax credit administration, but generalist tax credit staff were not properly trained and instructed in it by HMRC.
The principle that HMRC should not seek to recover from tax credit claimants 'sums which are not true losses to public funds', set out in paragraph 15500 of the compliance manual, (before it was expunged in May 2007) is what this long-running argument has been over.
http://www.rightsnet.org.uk/dc/dcboard.php?az=show_mesg&forum=104&topic_id=1941&mesg_id=1941&listing_type=search
the first role of administrative policy is to give proper effect to the statute law, and it can be seen that the statement of principle in para 15500 is crucial in relation to section 28, where HMRC has discretion, the claimant has no right to a fair hearing, and the overpayment decision is an enforceable debt recoverable under Tax Act powers. administrative policy is not law, but it is subject to law, and a policy which is not reasonable, rational, or is operated in excess or abusive of a public body's statutory powers will be maladministration, and unlawful. policy which is discriminatory will also be unlawful, and if a policy is unfair to all, imho, the resultant injustice almost inevitably falls disproportionately on members of discriminated against groups.
"If the claimant reports the change in household late there will be an overpayment, even if the change makes no difference to the amount the person is entitled to." CPAG press release.
no judicial review challenges, to the best of my knowledge, have been allowed by HMRC to reach the courts, and it is believed that HMRC has conceded individual cases, but not changed its policy (prior to now). i am aware, from FOI requests, that at the time of the May 2007 policy decision, HMRC's solicitors were consulted in the review and advised that they wanted 'offsts' to be available because they could not easily defend decisions in court.
HMRC have been under sustained pressure over this issue from many quarters, notably Child Poverty Action Group and Low Income Tax Reform Group, undoubtedly MPs and the public...
please correct me if I'm wrong, anyone, but I'm not aware of any explanation for this policy U - turn. In the absence of such, I feel justified in believing, that for whatever reasons reality has dawned, the overpayment recovery policy hitherto operated by HMRC was unlawful, and that, not HMRC rules, will inform my approach to individual clients with problems with tax credit overpayments.
I am of course happy, that in time, this problem will not exist. : )
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