Terms & Conditions

[Mark]

If you haven’t had a chance to see amendment 9 yet then I should warn you that you are in for a let down. The guidance on how to treat awards that contain arrears is surreal. We are being told to take the total annual award amount, deduct the payment of arrears from it and divide this result by the number of days from the date of the award notice until the end of the tax year. We are then supposed to take this into account from the date of the award notice.

This is totally bonkers and has no legislative basis whatsoever.

Look at Case Study B (Kieran Erikson). The annual WTC award is £3569.26. Now under normal circumstances we would divide this by 366 and multiply by 7. This gives us £68.26 per week. But after we have deducted the arrears sum and divided only by the number of days from the award notice to end of year we have £71.84 p/w instead.

£71.84 – £68.26 = £3.58

So assuming a combined HB/CTB claim and the total 85% taper this means that the claimant is losing £3.04 per week benefit BECAUSE he had a tiny Tax Credit arrears sum. Now this is obviously offset by the fact that for the first 3 weeks of the claim no Tax Credit is taken into account at all. But this is only worth 3wks X (£68.26 X 85%) = £174.06.

Now – if you’re still with me consider this:

£174.06 / £3.04 = 57.26

In other words – after 58 weeks of taking the WTC into account via the suggested method the claimant will then start to be worse off than if they had no arrears payable in the first place. We already know that it will take a long time for the 2004/5 award to be made and that until it is we would continue taking the 2003/4 amount into account so in this case the claimant can only lose out.

Would anyone like to join me in convincing the powers that be that the sensible method is just to take the annual award, divide by 366 and multiply by 7 to get the weekly, but then take this into account from the date of the award notice. Surely a much simpler and fairer idea?

[Julian Hobson]

How about one of the London authorities inviting the authors of this stuff to come and have a go on some live cases. Using only the tools an average assessor would have, with the deadlines they have, with the variety of cases they have. On the understanding that they will also deal with any queries/appeals that might come up on those or in relation to any other TC issue.

This is total rubbish, simplification it isn’t! add in Pension credits and what have we got ? A festering pile of disjointed and disparate regs that even we who are supposed to be blessed with expert knowledge, can’t navigate. What hope is there for assessment staff who don’t have the luxury of being able to theorise and change their mind as often as we do ?

[peterdelamothe]

Hard to disagree with you. The schemes just do not fit together at all.

[Anonymous]

I’m with you on this one Mark. Amendment 9 throws up even more anomolies:

Using the method described in case study B, we are asked to take a WTC income of £71.84 wef 28/4/03 (Monday following 22/4/03). Now, assuming this award lasts until 5/4/04 and a new award is then made immediately from the 6/4/04, the HB/CTB claim would be amended to include the new figure from 12/4/04. This would mean we have used £71.84 for a period of 50 weeks (28/4/03-11/4/04) which suggests the customer received WTC of £3592 even though their actual award was only£3569.26 – and thats without including the “capital” of £79.76! What happened to only taking into account the income actually received?

My second point, and I’ve banged on about this on previous posts, is the date of change for HB/CTB purposes. S3 suggested that, where a customer is paid four weekly, we have to differentiate between “in arrears” and “of arrears” by tracking back four weeks from the date of payment. The date of change was then the start of that particular payment cycle. (I have had this confirmed by e-mail by the DWP as well). However, amendment 9 now indicates that the amendment date is simply the Monday following the date of notification. I’m more than willing to go along with this as it is much simpler but are we sure its correct? If we do it this way, there will no longer be any Departmental Error overpayment as my understanding was that this only occurred for the period spanning “date of change” to “date of Tax Credit notification” (Again, S3, Annex B, case study 2).

Final point, none of this matches the instructions given for actioning the recently received proformas. Given that we did not know payment dates, notification dates, etc. , these claims have been amended in a totally different way.

I think I’ll take up an easier career like brain surgery or particle physics…..:15:

[Julian Hobson]

A colleague has just reminded me of that old buddhist saying that “when a butterfly flaps its wings in the Adelphi it causes a thunderstorm in Huddersfield” soon they will realise that tinkering with bits of the Regs just doesn’t work, its the whole thing thats broken.

[Anonymous]

I totally agree with Anthony. I need to get an instruction out to our assessment staff on how to process these awards and I have no idea what I should be instructing them to do!!!!

[Anonymous]

Can someone please enlighten me as where I can obtain a copy of amendment 9 – My authority has only just received the hard copy of amendment 8

[Mark]

There is now another theory doing the rounds that in many (if not all) cases the IR are not paying tax credit arrears in a lump sum. Instead, they are spreading out the arrears over the year by increasing the normal instalments. This should spark an interesting debate about whether these amounts are in fact arrears. If so, how the hell will be able to identify these sums (which are of course capital not income). Alternatively, lets say that they are not deemed to be arrears because they are just paid with the normal ongoing entitlement – where does that leave the status of the latest guidance? My view is that whether paid in instalments or in one go arrears are arrears. To conclude otherwise would mean that people will lose substantial entitlement to HB/CTB because of errors or delays at the IR. Is it possible for the Tax Credit saga to get any worse?

[peterdelamothe]

No.

[Anonymous]

You can get amendment 9 from John Kennett at the DWP he very kindly sent a copy via e-mail to me yesterday. I also suggested that he look at this thread and make some response to the concerns. No response noted yet though!

As I’m typing, amendment 9 has just arrived from Chris Taylor, maybe someone has taken the hint!!

[andyrichards]

There is a whole discussion thread on Rightsnet about this – apparently it’s true. And you are right there is no separate identification of the arrears – it onlt becomes apparent that there are arrears when you do a TC calculation!

This is of course completely at odds with what DWP have been saying in the handbook and it does not seem right or fair for the claimant either, particularly if they accrued debts while waiting for these arrears.

[Anonymous]

Having finally received Amendment 9 I have been trying to compose a procedural note for benefit staffand have noticed that Case study A nd B calculate the weekly figure by dividing by 340 days. However, there are actually 350 days from 22/04/03 to 05/04/04. When you calculate using the correct number of days the figures arrived at seem to make more sense. Case study A CTC = £38.08. Case study B CTC = £112.05 WTC £69.79. Hope this helps. :16:

[Mark]

Michelle is quite right. The number of days in the examples is wrong. However, in Case B this still means that we end up taking more into account in ongoing benefit because of the arrears (£1.53 p/w to be exact). It will therefore be highly unlkely that the claimant will in fact lose out overall but the disparity in the ongoing weekly HB/CTB is still bizarre. Oh – and what the hell was all that stuff about payment cycles if all we have to do is look at the date of the award notice? And do these examples have any bearing on reality at all – I really don’t know!

[Anonymous]

Mark
Wasn’t “all that stuff about payment cycles” more to do with [b:9fe97fff97]predicted changes [/b:9fe97fff97]in the award?

(just askin’)

Whilst we are boggling each other’s minds – how about this one:

Section 12 – Points to Remember says

“for the remainder of the 2003/4 tax year(using a Sunday to Saturday calendar week) when a change in the amount of Tax Credit occurs, or a new award is made, the relevant day of the week you should use to decide when the change of circumstances should take effect is the Sunday of the week of payment”

i.e. Award notice dated June 4th, entered onto system with date Sunday June 1st, taking effect on Monday 2nd June.

That method is about as fashionable as shell suits now – right?

[Mark]

Well Peter, I reckon you can now just choose which section of the manual you prefer when it comes to:

Overpayment classification;
Relevant dates of change in HB/CTB;
Whether frequency of payments matter;
Just about everything else too.

My understanding about payment cycles was that at the start of the year they could only be relevant to the predicative change cases – but this is because the changes are in the middle of the year! Therefore, if the awards are made (or start in) the middle of the year I had assumed this would be treated in the same way. As far as I’m concerned the manual now wants it both ways. The relevance (or not?) of the “Saturday to Sunday” week is a case in point.

[Author]

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