I have been looking at the question of how to challenge Tax Credit Overpayment decisions and I am in the need of some advice.

As i understand it the decision to recover is not appealable but the question of whether the decision creating the overpayment is. Hence the advice to appeal the awarding/reviewing/entitlement decision. My instict tells me that that may not be enough in itself which brings me to the reason for this post.

Section 38 of the TCA allows for the right of appeal against decisions made under regulations created under Section 21 of the TCA, (The Official Error Regulations). These regulations provide that decisions can be revised in our clients favour if it is incorrect by reason of official error.

To take advantage of these appeal rights our clients would have to apply for a review of the incorrect decisions and if unsuccessful on review then appeal.

Clients have five years from the end of the relevant tax year to ask for an official error review. Any appeal would follow from the decision on review. It is possible that some clients could have three or more appeals running at the same time.

In an overpayment case the only way to revise in our clients favour would be to raise the level of award and so eliminate the overpayment altogether.

Any thoughts would be welcome.

Thu 22-Jul-04 09:31 PM by shawn

Tentative thoughts:-

1. You say clients have 5 years to ask for an official error review. But the S.21 Regs. (SI 2003 692) simply say the decision may be revised as long as 5 years after. In fact, there is no mention in the Regs. of the claimant being able to ask for a review at all! Is there anything anywhere else that says they can? (I would dearly like to know if there is, because it might help a client of mine.) If not, could it be that these Regs. are simply something IR can use if they wish but entirely at their discretion without claimants having the right to ask them to?

2. A lot of overpayment cases will be ones where the original decision was correct but the payments under it were not made correctly - e.g. because IR's system was incapable of coping and paid wrong amounts. How can you ask for a decision you know is correct to be reviewed, or appeal against it? If you do, won't the answer be that the decision was right so cannot be changed? As I see it, you would have to appeal against the decision which initiated recovery of the overpayment, but even here the decision could be correct and what you are doing is - in effect - appealing against recovery of the overpayment (which is not appealable). I must be missing something here because I know the advice is to appeal the decision - I would be interested to know what sort of arguments are put forward in such appeals.

I am also struggling with the same point "2" you make Derek :

My client, single person working 37 hours also initially entitled to Disability elemement gave income details correctly and timely to the tax office because she transferred from disability working tax. She was then given award of £80.00 a week. She phoned twice to query why she was receiving so much again giving details of her income and was each time assured that she was entitled to what she was paid.
Final award notice now identifies £820 overpayment which on the figures is right.Because correct entitlement was only about £62 a week

In fact, from April to June this year there has already been a further overpayment because although client gave info from last P60 again straight away tax office continued to pay the high rate and only reduced it from the beginning of July.

Correct entitlement this year is only £26 a week because client no longer links to disability element

So, she is faced with a drop in income of £54.00 a week, that is without any recovery which at present they are not yet deducting.

This, on a basic wage of £188 gross and a sizeable mortgage I would think is going to cause a severe hardship

But, as there is no provision of 'failure to disclose" I cannot see either how to challenge the actual overpayment because the calculations are right and the entitlement at end of year is now made correct. The only action I can see is to apply for non recovery but my instinctive feeling is still also to say to appeal because what happened is not 'just ' but I fear I am still stuck in the old thinking.

Any suggestions most welcome

Lee, I might be misunderstanding something here, and maybe you can help. I'm aware that in TC cases "the decision to recover" is not appealable, but I'm left wondering why that is seen as an overwhelming problem? In all overpayments, the decision on whether or not to recover is normally outwith the scope of an appeal. There is of course a right of appeal against recoverability in DWP benefits (and to a more limited extent in HB/CTB), but in any case this is never the only possible ground of appeal. We tend to include "I do not accept that there has been an overpayment or that the calculation is correct" as a ground in DWP cases, and also note that the burden of proving a valid overpayment decision (and the facts, etc) lies with the DM.

So can't we just use similar grounds in TC overpayments? Where's the obstacle to just putting in an appeal anyway?

As I say, I'm sure I'm missing something as this is a relatively new area to me.

Derek regulation 3(2) Official Error regs makes it clear that the claimant(s) can apply for a review if they believe there was an official error. Section 38 of the Tax Credit Act allows an appeal against the review decision.

the question i never asked and should have is, Has anyone managed to stop the recovery of an overpayment whilst an appeal is in the system and if so how?

I will try to respond to the other points tommorrow. I am trying to get my head around Tax Credits so the more comment the better please.
Lee

Lee. Thank you - mea culpa. I got so involved in trying to work out what the last phrase in 3(2) meant that I overlooked the main point!

As regards your question, I have been told by the helpline and by Customer Relations that recovery of an 03-04 overpayment will start automatically once the renewal form has been received and processed. I queried this in relation to a case which has been through the IR internal complaint process and is now with the Adjudicators Office. I was given to understand it didn't matter what stage in the complaint/appeal/adjudicator process had been reached - they will start recovery and (they say) if the eventual decision is not to recover then they will repay the money. If anyone has had a different experience on this I would like to know.