Tax bill for IB claimants 2010-2011

Some useful info :

I am currently dealing with a tax bill for a client who has been on IB since 1997

HMRC reckon he received £9800.00 in IB that tax year, and therefore they want £700 off him in unpaid tax.

This equates to just under £190 a week, which seems high for a single person on IB!
He swears he got “about £200 a fortnight back then” which seems right, however he cannot back it up as he has no bank statements for that period.

I rang IB who told me that his award letter from 2010-2011 have been archived, but they will unearth it and post it to client in 14-21 days so we can advise HMRC where they may go regarding this issue.

Kath from IB has verbally informed me that HMRC have made a pigs ear of “Tens of thousands” of IB claimants tax affairs from that period, and in one case an IB claimant had underpaid £200,000 of tax in one year.
I know before welfare reform that the system was more generous than now, but for crying out loud!!

One question though (hypothetical as it MAY occur) :

If a client wins a tribunal after a 18 month appeal, and arrears for that 18 month period are paid in May are the arrears classed as income for the new tax year, and added to the rest of that years taxable benefits or is the money (arrears) classed as only being taxable for the previous years that the arrears were retrospectively paid?

If so then this is rather unfair, as if the correct benefit was paid in the first place then a lump sum arrears payment wouldnt be necessary and therefore no tax bill would be generated.

Just a thought…..............

I know next to nothing about tax law so could be completely wrong but it seems to me that this might be covered by s29(1)(a) or (b) and subs 9(a) of the Taxes Management Act 1970 and seems to mean that the relevant tax years are the ones for which the income is payable in respect of.