Overpayment – offical error???

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    Hello all

    I have an appeal from a claimant who has been awarded Incapacity Benefit retrospectively to January 2010, which created an OP of HB and CTB.

    Bit of history of the claim…Claimant had applied for, and been refused, IB in August 2008, on the basis that she hadn’t contributed enough in the tax year on which the IB calculation was based. Every year she reapplied for IB, every year she was turned down. She did not appeal these decisions.

    In Jan this year she was advised to speak to HMRC to see if any credits could be added for the period she claimed SSP. This she did, and she was awarded additional credits, which then qualified her for IB from Jan 10. She told HB immediately she received confirmation in writing, the claim was amended and large overpayments were created.

    A colleague advised the claimant that the overpayments would be written off, but this was refused by a manager as she had received a large amount of money in the retrospective IB award, with which she could repay the HB overpayment (which I don’t think is relevant). The basis of the HB appeal is that she could not have known she was being overpaid and we should have written the op off.

    Firstly – does anyone think this is official error? I’m not sure as DWP made their initial decisions on the info they had, and amended their decision based on the new info (additional credits). The award was not as a result of an appeal against the refusal of IB, it was purely on the basis of new information which had not been known previously. I’m not sure this constitutes DWP error.

    Secondly – if it’s official error, is it recoverable? I don’t believe the customer could possibly have known she was being overpaid until she was notified, and she notified us as soon as she was told!

    Thirdly – if the first two points are satisfied, is the amount of IB she receives relevant? My concern is the LA will look foolish taking this to tribunal because ‘she can afford to repay it’.

    Any thoughts gratefully received 🙂



    I cannot see how it can be an official error. Where was the mistake and by whom? Maybe by HMRC? Very tenuous.

    If it is “official error” then I would agree your client could hardly have realised she was being overpaid …in fact she was not. You corrected her entitlement immediately.

    So that leaves your third point – does the backdated lump sum count as income / capital and is it disregarded? You would need to quote the relevant legislation in the schedules etc.

    But there is a 4th issue here. You have the power to write the money off and the claimant was given misleading information which she may have relied upon. So I wonder if this is more of a complaint than an appeal? If it is accepted that the claimant was told the overpayment would not be recovered then perhaps the LGO might be interested?


    Thank you Peter, that’s very helpful

    Kevin D

    I broadly agree with Peter’s response and add the following.

    In my view, the backdated IB undoubtedly counts as “income” because it is attributable to an identifiable period – HBR 79(7) makes the effective date of change for HB clear. This approach is supported by, amongst others, CH/1561/2005.

    If, at the date of payment, the period covered by the arrears has expired, those arrears count as capital from that date (monies cannot be both capital and income at the same time, but income does change into capital when the income period expires – R(IS) 3/93).

    For the sake of argument, let’s say any overpaid HB/CTB is recoverable in law. Can it be recovered? Normally, the answer is obviously yes. BUT, in your case, the clmt has apparently already been told it will NOT be recovered. Irrespective of whether the clmt makes a complaint, it may well be the clmt has a strong argument that the LA is now estopped in law from seeking recovery. This will depend on exactly what she was told by the LA’s staff member. As a rule of thumb, once person A tells person B that any monies otherwise owing won’t be recovered, that’s it (subject to exceptions).


    Thank you Kevin, that’s also very helpful

    Andy Thurman

    [quote=peterdelamothe]I cannot see how it can be an official error. Where was the mistake and by whom? Maybe by HMRC? Very tenuous.[/quote]

    Is it that tenuous?? It certainly seems as if HMRC ‘lost’ this person’s NI contributions (had it happen to me years ago – fortunately my employer at the time could confirm to them and it was corrected!!) and has subsequently corrected it allowing the IB award.

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