Tax credit arrears

I have a very tangled case and my brain aches every time I think about it so I am requesting what may be an obvious answer. Cutting a long story very short I have asked for a reconsideration of a decision not to award income support in September 2008. The decision was that income was too high as they had tax credits coming in. This was not the case at the time but they did have a claim in for tax credits which had never been properly sorted. My reconsideration request on the IS decision went in in June this year and I have been told it is being dealt with. My client told me last week that tax credits have also finally contacted to say that they should have paid and she is about to get a large payment to cover the period up to December 2008. Will this payment affect the IS decision ?

hi

i think cis/2761/2008 might be useful here - says that there is a question as to whether any payment of tax credits not made under an award should be treated as income because reg 31 of IS regs provides for ‘award’ of tax credits to be taken into account.  so could argue tax credits definitely shouldn’t have been taken into account at the time since there was no award and no payment.

here’s a link to briefcase summary of decision -

http://www.rightsnet.org.uk/briefcase/summary/taking-overpaid-tax-credits-into-account-as-income/

as regards subsequent tax credit award, i think it is arguable that initial IS decision should be revised on grounds of official error.  that decision could be subsequently superseded on grounds of change of circs due to tax credit award but any overpayment would not be recoverable as no failure to disclose or misrepresentation.

cheers ros

Thanks Ros but botheration.  I was hoping for a nice regulation saying that the tax credit payment would be automatically taken as capital. 

At this point it’s looking as if the tax credits decision will be made before the IS decision.  The basis of my reconsideration request was that only one payment of £60 tax credits had actually been made.  I made it clear that the matter had never been decided properly but now it has (probably).  What do you think about tactics.  I assume we must disclose the tax credits decision as soon as it arrives;  will it be best to go straight in with cis/2761/2008 or should I wait to see if they finally decide on a nil award?. 

The reason it matters is that there is a whole history of unpaid mortgage interest on this claim from then to now and if IS is not awarded then - there’s a whole history of decisions following going in and out of esa and IS that will be a nightmare to untangle.

hi again

hmmm - very tricky.  thinking about it a bit more, i suppose that if IS now awarded on basis of no tax credits and then tax credits awarded afterwards, then any overpaid IS could be recovered under section 74 of social security adminstration act in any event (duplicate payments).

might be best to wait and see what tax credits does - no point getting a payment and then having to repay it. also will be clearer what , if any, IS should have been paid on basis of actual amount of tax credits awarded.

anyone else got any ideas?