Urgent please - overpayment and underlying entitlement

Client was overpaid HB and W and C Tax Credits.  Entitlement to TC ceased when child was taken into care.  She delayed notifying TC and HB, hence o’p arose.
We are trying to find the answer to the question of whether the HB overpayment can be offset by underlying entitlement over the same period, as a large amount of money is due to the fact that she was receiving TC to which she was not entitled, but the HB has been recalculated with the applicable amount for a single person, but taking into account the income of the TCs to which she was not entitled, which were also overpaid and which she is also having to repay.  Our info sources are p 276 CPAG and the Shelter Guide to HB section 18.16-21 which appear to conflict.  The former in the chapter on ‘income’ says actual TC receipts at the time are counted but the latter says any amount of HB which should have been payable had all the facts been known and changes reported promptly should be deducted from the o’p. The deadline for challenging the decision is 8.1.15.  I would be most grateful if someone could clarify whether we can argue for underlying entitlement, please.  (We have checked that the overpayments are recoverable).

CPAG refers to CH/1450/2005, link here:

http://www.rightsnet.org.uk/?ACT=39&fid=7&aid=209_kMW2Q76SuBB1lJ5W0boV&board_id=1

The two commentaries are not inconsistent with each other: the actual facts at the time, which the Council did not know, were (1) the claimant was no longer responsible for a child and (2) the claimant was still actually receiving Tax Credits (whether or not they should have been doesn’t change that fact).  Having now established the correct facts, the Council has included the Tax Credit income for as long as the claimant was still getting it - which is correct under the HB Regs.  And CH/1450/2005 is indeed the authorty supporting that.

Tax Credits are never retrospectively adjusted in HB: what you were getting at the time is what counts as income.  In most cases, any under/overpayments are reflected in future payments so that the rate of Tax Credit currently in payment is more/less than it would otherwise have been and the claimant’s current HB reflects that that current TC adjustment. Everuything balanmces itself out in the long run.

Unfortunately this is no help to claimants who have no Tax Credit entitlement going forward and were overpaid Tax Credit in the past: with no current income to adjust, the claimant’s current HB does not include that balancing of the historic Tax Credit overpayment.  So there will always be a period where the claimant’s HB is based on an amount of income that the claimant now has to repay to HMRC without that being reflected in his/her current HB.

The only solution is to persuade the Council to use its discretion not to recover the o/p to the extent that it is based on income the claimant now owes back to HMRC.

Thank you both, that has clarified most lucidly!  As we had suspected, it will be a question of asking them to exercise discretion not to recover.