i know this has been discussed several times in the past (spent a good while yesterday reading all the threads, and even the Act!).

still not clear to me, however, which piece of legislation/regulation says that HMRC can treat a claim as, effetively, never having been a valid claim just for failing to get the annual declaration in within the specified time limit.

I know someone posted this question previously, but no one seemed to have the definitive answer (if there is one - those who draft tax legislation will never win prizes for plain english...)

Anyone?

and just to assist me on my way in the instant case, the man in the tax office upstairs from me could only say that people are spendthrifts and that's why they can't repay their "overpaid" tax credits.....

HI there Claire,

You may have seen the thread called 'restoring terminated claims' that recently ran on this page. Victoria and I disagree a bit on this matter, I think. My last post on that thread ended with:

... 'if the Revenue allow themselves under s17 to use the hitherto estimated data as actual data for the purposes of the previous year, then what prevents them from using the same data as the basis for the re-newed claim?...'

For reasons that I am not entirely clear about myself, I think that the wording of s17 allows the Revenue to do one of the following if someone does not return their reconciliation form at all, or late without good reason:

1) They can decide to base the previous years award on the old estimate, and use the same data to start the new years award

2)They can decide to base the previous years award on the old estimate, and then decide they do not have enough information to start a new one, in which case that is a decision that client should be told about

3) They can, if they wish, to treat a late submission of data, as if it was on time, and dance around the lily pond again as if nothing was wrong

I am not convinced that the claim dies simply because the client does not comply with the reconciliation timetable, although clients often seem to believe this, because of the Revenue's habit of recovering provisional payments that have been paid since April.

I have a horrible feeling I might have got this all wrong!

Steve

yes, i read that, but since i agree that the legislative provision isn't clear, i wondered if anyone yet had a definitive answer.

i find the legislation clear as mud.

you're not on your own! not only is there a question whether these decisions are fair, but also whether they are legal. the decisions appear to be grossly unfair... along with the denial of a right to a fair hearing...

Tue 29-Jan-08 03:34 PM by Victoria Todd

I absolutely agree that this is a grossly unfair practice, on the legal front I have been back to look at the regs in light of the posts above.

Section 17 seems to be about finalising the previous year claim and states what information must be asked for. But it doesn't seem to be the basis for treating the declaration as a claim for the next year.

Regulation 11 Claims and Notification regs prescribes the circumstances for when a claim is treated as being made - which is where a person has made a response to a Section 17 notice. So if no response is made no claim is made. In the meantime the run on payments have been made under Section 24(4) TCA....so then if no claim is made, it follows that there is no entitlement (as entitlement depends on a claim being made under Section 3 TCA)and so it seems to me that HMRC then use Section 28 to recover these.


Victoria

thanks victoria. that at least makes sense!

so, it looks as though parliament needs to be persuaded that something needs to change ....and i take it that has been tried? and in the meantime no consolation to the lay clients

mmm.

It made sense when I worked through it, but I get more confused each time I go back to it.

I now need to go and sit in a dark quiet room to recover!

I am not sure how this fits in with what Steve is suggesting in relation to Section 17?

Victoria

They are funny things these provisional run on payments. They appear as an extra discretionary thing in s24(4) and are treated as payments of tax credits for the new tax year by virtue of s24(5)for "the following provisions of this part" (not the preceding provisions?). The bit on overpayments s28(1) specifically requires determination under s18-21 for a payment to be an overpayment but it doesn't seem to be possible to make a s18 decision on these payments and the revenue don't seem to be trying to anyway. One of my collegues recently added a complaint that an overpayment decision has been made without a s18 decison notice to a complaint to the adjudicator but not heard anything yet.

A tax credit claim is only for one year: s3 TCA

A response to a s17 notice can be treated as a claim: reg 11 TC(C&N) Regs 2002

Provisional payments are not payments of tax credits under an award otherwise they wouldn't have to be treated as such for 'the following provisions'(not the preceeding provisions?): s24(5)

Since there is no claim there can be no s17 notice, no s18 decision, and without a s18 decision no overpayment as defined by s28.

I will no doubt have come up with a reason why this is wrong by tomorrow morning but it seems good to me for now. It is free money to get us through the credit crunch!

Did we discuss this before? It looks good on first read Damien, but I seem to think in my mind that I found something that hampered it - can't think what.

Maybe a return to my darkened room will help...

Victoria

"It made sense when I worked through it, but I get more confused each time I go back to it.

I now need to go and sit in a dark quiet room to recover!"
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

: ) Victoria - i think this is the effect it has on everyone!

we have payments before an award, and who knows what 'claim', 'entitlement' 'award' 'overpayment' etc means in Revenuish?
(You might call it a dog, but we call it a fish... and what you call sky, we call a handbag, and ...shan't tell you any more, so there!).



i have tried and tried and i still can't make sense of it. i'm now very wary of trying harder, just in case i succeed and become as insane as HMRC.

HMRC/Gov't is clearly determined not to subject itself to the discipline of explaining its thinking to tribunals in plain English or allowing objective scrutiny of its most profitable decisions by bodies which will not be suckered by its gobbledegook.

meaningful dialogue with these people has proven impossible.

the information in their replies, when they deign to, appears to be a controlled minimum, designed to prevent any enlightenment into the legal basis of their decision-making or their interpretation of the law. they avoid any mention of the law. it's like trying to crack a brazil nut with a sponge. 'openness' and 'transparency' must be profanities in their private world.

is it safe to assume that Parliament didn't have a clue what it was voting on when it passed the Act?

Ok, thanks to a very helpful colleague.

Section 28(6)we think is the relevant section, with the decision to terminate Section 24(4) payments coming under Section 16.

So in that case there wouldn't need to be a section 18 decision (which is only required for Section 28(1)).

Victoria

sorry Victoria - i maybe needed a longer lie down, but i don't think 28(6) covers this - the way i read it, that subsection covers cases specifically where a CTC claimant was not responsible for a child, or a WTC claimant was not in remunerative work, at any time in the period of the award. i still can't follow the legislation trail, and i'm wondering whether we can crack this in a joint effort??? i've cut and pasted a bunch of TCA sections below, including the requirement for notifications - i don't recall seeing the legislation quoted on any overpayment notifications, which would at least go some way to giving folks a fighting chance, and i'm wondering about missed appeal opportunities. i can't rule out that they were staring me in the face, and if so, can anybody point me where to look?

jan
*******************************************************************


Appeals

(1) An appeal may be brought against—

(a) a decision under section 14(1), 15(1), 16(1), 19(3) or 20(1) or (4) or regulations under section 21,

(b) the relevant section 18 decision in relation to a person or persons and a tax credit for a tax year and any revision of that decision under that section,

(c) a determination of a penalty under paragraph 1 of Schedule 2, and

(d) a decision under section 37(1).

(2) “The relevant section 18 decision” means—

(a) in a case in which a decision must be made under subsection (6) of section 18 in relation to the person or persons and the tax credit for the tax year, that decision, and

(b) in any other case, the decision under subsection (1) of that section in relation to the person or persons and the tax credit for the tax year.
***********************************************************
sect 28 (6)
Where the Board decide under section 16 to terminate an award of a tax credit made to a person or persons on the ground that at no time during the period to which the award related did the person or persons satisfy—

(a) section 8(1) (if the award related to child tax credit), or

(b) section 10(1) (if it related to working tax credit),

the Board may decide that the amount paid under the award, or any part of it, is to be treated for the purposes of this Part (apart from subsection (5)) as an overpayment.
****************************************************************
section 8 (1)
The entitlement of the person or persons by whom a claim for child tax credit has been made is dependent on him, or either or both of them, being responsible for one or more children or qualifying young persons.
sect 10 (1)
The entitlement of the person or persons by whom a claim for working tax credit has been made is dependent on him, or either or both of them, being engaged in qualifying remunerative work.
********************************************************************
sect 24
(4) Where an award of a tax credit has been made to a person or persons for the whole or part of a tax year, payments may, in prescribed circumstances, continue to be made for any period, after the tax year, within which he is or they are entitled to make a claim for the tax credit for the next tax year.

(5) Payments made under subsection (4) are to be treated for the purposes of this section and the following provisions of this Part as if they were payments of the tax credit for the next tax year.
*****************************************************************
sect 16
16 Other revised decisions

(1) Where, at any time during the period for which an award of a tax credit is made to a person or persons, the Board have reasonable grounds for believing—

(a) that the rate at which the tax credit has been awarded to him or them for the period differs from the rate at which he is, or they are, entitled to the tax credit for the period, or

(b) that he has, or they have, ceased to be, or never been, entitled to the tax credit for the period,

the Board may decide to amend or terminate the award.

(2) Where, at any time during the period for which an award of a tax credit is made to a person or persons, the Board believe—

(a) that the rate at which a tax credit has been awarded to him or them for the period may differ from the rate at which he is, or they are, entitled to it for the period, or

(b) that he or they may have ceased to be, or never been, entitled to the tax credit for the period,

the Board may give a notice under subsection (3).

(3) A notice under this subsection may—

(a) require the person, or either or both of the persons, to whom the tax credit was awarded to provide any information or evidence which the Board consider they may need for considering whether to amend or terminate the award under subsection (1), or

(b) require any person of a prescribed description to provide any information or evidence of a prescribed description which the Board consider they may need for that purpose,

by the date specified in the notice.
********************************************************************
23 Notice of decisions

(1) When a decision is made under section 14(1), 15(1), 16(1), 18(1), (5), (6) or (9), 19(3) or 20(1) or (4) or regulations under section 21, the Board must give notice of the decision to the person, or each of the persons, to whom it relates.

(2) Notice of a decision must state the date on which it is given and include details of any right to appeal against the decision under section 38.

(3) Notice need not be given of a decision made under section 14(1) or 18(1) or (6) on the basis of declarations made or treated as made by the person or persons in response to the notice given to him or them under section 17 if—

(a) that notice, or

(b) in the case of a decision under subsection (6) of section 18, that notice or the notice of the decision under subsection (1) of that section,

stated what the decision would be and the date on which it would be made.

Well I was right on something: I've come up with a reason that I was wrong last night by this morning! I think the s3 thing about a claim being for one year and the reg 11& 12 bit on declarations being claims for the new year means that termination isn't necessary and there is no possibility of the claim continuing into the new year without a declaration being returned or not asked for.

I think what it all comes down to in the end is s28(1) and how the wording is interpreted. One approach would be to say that it requires a s18 decision as discussed but I have thought that there is another approach: if there is no determination under s18 then any payments must be payments in excess of the entilement since no entitlement has been found. I can't see how they could do this until the end of the tax year since until then there is at least the possibility of a claim and a s18 decision.

blimey.

essentially, then, it would all have been a lot simpler if they had just said, "you need to amke a new claim for the new tax year, before the end of the old tax ydear" and " we will not continue tax credit payment into the next tax year unless we have received your application before the end of the old tax year"

that would have the virtue of simplicitiy, be easy to understand, and avoid overpayments arising in the circumstances with which we all wrestle.

(or more to the point, try not to wrestle - and don't get me started on lsc paying for the work....)

In reg 11: the s17-notice-treated-as-a-claim bit, says a declaration sent in any time up to Jan 31st can be backdated to 6th April if there is good cause. Where did the 30 day bit come from?

Regarding the issue of whether s17 can enable the continuation of an award without a declaration etc, doesn't s17(2)(b) and s17(4)(b) etc sort of allow for this?

And s18(1) - (3).

It does if the revenue tell the person they do not have to respond to the notice which is effectively what those sub paras do. This is covered in reg 12 of the claims & notifications regs which very bizarely treats a declaration which was not made or required as a claim. This seems to be different to the situation where a response to the notice is asked for but not forthcoming where they still have to finalise: s18

Now click your heels three times and repeat 'there's no place like home'...

As I read through this, I was hoping it would end with a definite conclusion - rather silly of me, I admit; whoever heard of anything clear and definite about Tax Credits!

I have a client who is certain the renewal form was sent off in time but TCO say they did not receive one, so there is an overpayment.

Bearing all the above in mind, what - if any - practical steps can be taken to get it written off? Does all the analysis of the legislation help, or do we just have to accept that they do have the legal right to do this?

Well, I have a colleague who has a case with the Parliamentary Ombudsman at the minute in which the client states they never received their renewal form in 2004, but the Ombudsman is upholding the TCO's insisitence on recovery, because TCO say they definitely sent the renewal form and the Ombudsman's says its not HMRC's fault client didn't receive it. So, therefore I would just work through the o/p dispute process arguing that client definitely sent the renewal form and it's not his/her fault HMRC didn't receive it. When you get to the Ombudsman stage, give me a shout and I'll get you a copy of their decision in my colleague's case......what's good for the goose.....

Have they made a new claim for tax credits now?

Yes, they made a fresh claim and are disputing the o/p - best advice we could give to secure the income quickly.

Sorry, should have asked did they make a new claim in 2004-05?

Derek, you might want to see what the parliamentary ombudsman says about your type of case - link to report below.

http://www.ombudsman.org.uk/improving_services/special_reports/pca/taxcredits07/chapter3.html

Thank you, jj & bmen. The Ombudsman report makes interesting reading. Para 3.23 seems rather to contradict what bmen says the Ombudman's office is saying in his/her case!

I'll pursue my case and see where we get to!