I am seeking some assistance with a case in which we are challenging an overpayment of Tax Credits our client received, which then resulted in her HB being stopped, and then in rent arrears.

If we successfully challenge the TC overpayment is there a possibility of arguing that the Child Care Element of the TC that the client spent on Child Care should not be considered as Income for the HB calculation, as she would not have used the child care; if she had been advised by the Revenue, when she informed them that she was in receipt of Incapacity Benefit, after receiving sick pay from her employer that she was not eligible for TC?


Thank you

The difficulty is that HB/CTB regs make it clear Tax Credits are taken into account as income with regard to payment, not entitlement. So, for example, a claimant is paid £50 per week TC for a 6 week period but, is subsequently not entitled to that TC. The default position is that the income still counts in full for HB/CTB purposes.

There is one exception. If the clmt had persistently informed HMRC that s/he was not entitled to "£X" (TC) and had asked for payment(s) to change / stop, it could be argued the payments were "voluntary payments" and should therefore be disregarded for HB/CTB (see CIS/1813/2007).

BUT, CIS/1813/2007 has been qualified (by the same Cmmr/Judge) as being very much an "on the facts" decision - see CH/4371/2006. CH/1450/2005 is also of relevance. So, based on the info given, it would seem very unlikely HB/CTB can be changed to take into account an overpayment of Tax Credits.

Hmmm. Following the above, it's conceivable that a recent UTD just *might* leave it open to argument that retrospective adjustments to TCs should be taken into account for HB/CTB purposes - CH/0653/2009.

At first glance HB reg 32 appears to determine that TCs SHALL be taken into account over a deemed period. However, the newly released UTD *may* leave it open to argument that HBR 79 "trumps" HBR 32. HBR 79 sets the date from which a change in circs takes effect.

Just to be clear, I'm not saying this is DEFINITELY the effect of CH/0653/2009; just that it *may* now be open to argument.

wasn't there a decision to the effect that it strains the bounds of good sense to call something income that has to be paid back because you weren't entitled to it in the first place? ringing a bell from early last year...

That was CIS/1813/2007. But, that was fact specific and was subsequently qualified by the same Dep Cmmr. However, as I suggested, CH/0653/2009 *may* open up the argument.