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Forum Home  →  Discussion  →  Income support, JSA and tax credits  →  Thread

Notional offsetting

roecab
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Welfare benefits supervisor - Roehampton CAB

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Total Posts: 465

Joined: 17 June 2010

Dear All,

Has there been any developments on this: -

HMRC are still considering the position for people who cannot made a new tax credit claim because they live in a UC full service area. Making a new claim is one of the requirements for notional offsetting to apply. From August 2018 we understand that HMRC will suspend overpayment recovery action on overpayments cause through late reporting of a household change where the claimant’s fresh claim was for UC and not tax credits due to UC rollout rules, pending completion of their policy review and processes for such cases.

Taken from

https://revenuebenefits.org.uk/tax-credits/guidance/how-to-deal-with-hmrc/dealing-with-debt/#Couples%20and%20overpayment%20recovery

Thanks in advance

Michael

Mark Willis
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Welfare rights worker - CPAG in Scotland

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Total Posts: 142

Joined: 17 June 2010

Hi Michael
No updated guidance, but this is the reply I got in August 2018 when HMRC were asked about this:

“HMRC will consider whether to apply notional entitlement in cases where there has been a household breakdown and the individual is prevented from making a new tax credits claim because he or she lives in a Universal Credit (UC) full service area or has subsequently claimed UC following a change of circumstances.

HMRC is currently working to establish processes, forms and guidance to support notional entitlement applications from individuals affected by UC. We are developing a new form to capture relevant information from individuals affected in order to determine the notional tax credits entitlement had they been able to claim it. Individuals will need to ask us directly as we will not be able to identify potential cases through other means. However, where they have been in contact to query overpayments arising from a household breakdown we are retaining their contact details to ensure they receive the relevant information once the new process is up and running.

Lastly in cases where the overpayment has been transferred to DWP and it is subsequently determined that notional entitlement should be applied HMRC will tell DWP who will make the necessary adjustments.”

I can forward the e-mail if you send me your details.

Also, the Adjudicator’s Office report last year found:
“A lack of customer focus and ownership of customer issues in HMRC’s approach where the matter spanned tax credits and Universal Credit. As a result, some customers fell between HMRC and the Department for Work and
Pensions (DWP). This resulted in customers being unable to resolve matters, and often incurring significant financial loss.”

Mark

roecab
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Welfare benefits supervisor - Roehampton CAB

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Total Posts: 465

Joined: 17 June 2010

Mark,

Thank you for the update.

And, yes that would be appreciated :

.(JavaScript must be enabled to view this email address)

Best wishes

Michael

Dan Manville
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Greater Manchester Law Centre

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Joined: 22 January 2020

Bump!

I’ll bump this rather than starting a new thread.

Any developments we know of?

I’ve case where HMRC claim to have transferred a 4.5k overpayment to UC with no signs an offset has been considered despite the fact it’s a clear candidate; it was an honest mistake with no financial benefit to the household.

My problem is that HMRC notified the claimant that they would impose a penalty but I can’t see that it’s been recovered, or that the o/p has been recovered.

I’m shy of making too many enquiries in case I stir up a hornet’s nest. Might it be that they have offset it after all?

Mark Willis
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Welfare rights worker - CPAG in Scotland

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Total Posts: 142

Joined: 17 June 2010

Hi Dan

I haven’t seen any developments on this, but have asked for an update. They have previously said notional entitlement might not be given if the claimant has acted fraudulently, i.e. a penalty imposed - however, the counter argument there is that the penalty is the punishment, and has set limits, so it is not fair to also use recovery as a punitive measure if the claimant has a notional entitlement. There is of course a right of appeal against a decision to impose a penalty, which might bring to light what has happened. Recovery via DWP must be notified, and they also said they would not transfer debts to DWP if there is an outstanding dispute or appeal, so if this has happened already then there is a risk recovery from UC will begin sooner or later and it may then be deemed too late to challenge recovery of the overpayment.

Mark