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

Carer’s Allowance Overpayment - effect on Tax Credits

Charles
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Accountant, Haffner Hoff Ltd, Manchester

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We have a client who has had her CA removed going back to 2014. Each year, she included the CA as income for tax credits, and it reduced her tax credits accordingly. We are currently appealing the CA decision.

1) Assuming the CA appeal is unsuccessful, is there any way to get HMRC to revise the tax credit decisions going back to 14-15? I was thinking perhaps requesting HMRC use s. 20(4) TCA 2002, but that would only allow us to go back to 16-17.
Or is a discretionary write-off of part of the CA overpayment due to the loss of Tax Credits the best way forward?

2) Should we be attempting to get HMRC to revise any awards while the CA appeal is still outstanding, or first wait to see what the outcome is?

Keena
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Welfare rights - Renfrewshire CAB

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I seem to have loads of clients who have suddenly received notification of CA O/Ps dating back to 2016.
Most of them are people who were working part-time and were unaware of pay increases impacting CA entitlement by taking them over the earnings threshold. Many of the O/Ps seem to date back to when NMW/NLW was introduced.
I believe all these identified O/Ps are a result of the CA system finally being aligned with HMRC.

I’m very keen to hear of any successes reducing the O/Ps by:
- HMRC revising TCs/offsetting against missed other entitlement.
- “averaging out” variable income.
- any other routes?

Charles
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Accountant, Haffner Hoff Ltd, Manchester

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In our case, we are appealing based on averaging earnings and childcare costs (we’ve had success with both arguments in the past).

Mark Willis
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Welfare rights worker - CPAG in Scotland

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Hi Keena and Charles
As you may know, Carers UK have been campaigning for the earnings limit in CA to be linked to the minimum wage to prevent this happening in future:
https://www.carersuk.org/news-and-campaigns/campaigns/fairer-for-carers-background
Mark

Ianb
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Macmillan benefits team, Citizens Advice Bristol

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Charles. Have just got a case like this.

I will of course, like you, first try and see if the earnings can be averaged in such a way as to remove or reduce the CA overpayment. However I have some questions.

Over a period of 6 years with irregular earnings would one be expected to apply the same period of averaging throughout the six years or do you think there scope to vary the period of averaging?

I have a vague idea that there is some tribunal decision that suggests DWP should seek to average in way most advantageous to clamant. Does that ring any bells with anyone? I may have imagined it.

If there remains a CA overpayment have you had any success with getting Tax Credits revised retrospectively or partial CA overpayment write off due to loss of Tax Credits?

As an aside, CA have indicated that they are open to looking at it as irregular earnings but infuriatingly they have asked for evidence of earnings for the whole period although, given that they have decided that an overpayment has occurred, they must have this information already (presumably from HMRC).

[ Edited: 18 Jan 2022 at 03:54 pm by Ianb ]
Charles
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Accountant, Haffner Hoff Ltd, Manchester

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Our case is currently waiting to be listed by the FtT. DWP are not happy with our averaging argument, saying that it would be wrong to allow us to average retrospectively, as we would obviously choose an averaging period which is most advantageous for the client, and would have even chosen not to average if that had worked out more beneficial. They seem to imply that they would only consider averaging if it would have been requested in ‘real time’.
It could be that this is only in our case where it’s not immediately obvious that averaging is necessary.

If there is any case law about averaging, I would be very keen to see it!

They have also refused to write off any of the overpayment due to loss of tax credits, and have said that that is simply a matter for HMRC. Our client has not wanted to start arguing with HMRC yet about trying to get previous s.18 decisions revised while we are still fighting the CA overpayment decision.

EDIT: See also what Peter writes here: https://www.rightsnet.org.uk/forums/viewthread/17973/#85042

Gareth Morgan
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CEO, Ferret, Cardiff

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Charles - 19 January 2022 08:26 PM

If there is any case law about averaging, I would be very keen to see it!

See R(SB)27/85 for some arguments.  CIB/4174/2003 para 12 is useful.  R(TC)2/03 touches on it. CI/1553/2009, etc.

Charles
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Accountant, Haffner Hoff Ltd, Manchester

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Thanks, will have a look at these.

Ianb
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Macmillan benefits team, Citizens Advice Bristol

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Thanks for the update, Charles.