Terms & Conditions

[martin walmsley]

Out of interest – how are other LA’s treating any HB/CTB o/p’s created by awards of WTC/CTC? To me it is a problem now, as the NTC notifications do not break down which part of the payment is a payment in arrears and which is a payment of arrears. I understand Amendment 9 will clarify the matter?

Has anyone started treating any NTC awards as capital yet? Also, has anyone been classifying any o/p’s as Departmental Error?

Any comments would be appreciated…
Martin.

[Anonymous]

We have just started classifying some HB/CTB overpayments as departmental error following the guidance in circular S3/2003 and the examples given in amendment 8. Basically we are treating o/p for the period 07/04/03 to the Monday following the date the award notice was issued as departmental error. If someone appealed on the grounds that the award notice was received a number of weeks after this date we would re-classify the o/p as departmental error as per the guidance in Amendment 8.

However, could someone please confirm if this provision only applies to O/P’s created during the period 05/04/03 to 31/05/03 or if these dates apply to the actual period of the O/P.

[martin walmsley]

From the way Case 3 ex 1 is worded in Amendment 8, it would appear it will be ongoing, quote, “…there is already an overpayment of 3 weeks…The Department’s view is that the customer is blameless so recovery cannot be sought…Overpayments arising from this retrospective attribution of NTC income will always receive 95% DWP subsidy whenever they arise, and they are not confined to the specified time limited period”.

But don’t quote ME on that!

Incidentally, the way you are classifying o/p’s from 7/4/03 seems fine for 4-weekly NTC awards, but what about weekly ones? – are you using “arrears of” as capital in the HB/CTB assessment?

Martin.

[Anonymous]

Although the way the guidance words it can be quite tricky at times, my thoughts on this are that arrears are calc’ed by:

* working out a daily rate by dividing the award by number of days it represents
* counting the days from the award start to the day before the date on the award letter
* using the daily rate X days to produce an arrears figure

The payment cycles (weekly/ 4weekly/ 2weekly) have no effect on this method of working out the arrears.

[Anonymous]

To date, we have had no weekly payments that have included arrears.

[martin walmsley]

Regarding Peter’s post – but surely the pay period does matter when assessing which part of the payment is NTC “in arrears” as opposed to “of arrears”?

Martin.

[Anonymous]

Martin,

It doesn’t matter in calculating the amount of the arrears. i.e. the bit which gets treated as capital.

Why does it matter if payment is “in arrears”? Don’t you just bung it onto the claim as a weekly amount (from the award letter date), regardless of the the actual payment frequency.

So long as, over the period of the award, the correct amount is entered as a source of income – what’s the diff?

That’s what we are doing anyhow.

If there is any reason why this would lead to incorrect HB then I’d be interested to hear it. Really.

Try my QuickCalc. It calc’s arrears automatically. (See “Tax Credit input Calculator” posts for technical info and links.)

I’m genuinely curious about this ‘cos it makes me think I might be missing something important.

[Anonymous]

I’ve just read Case 3 example 1 (quoted above) and I am confused.

* Entitlement from 06/04/2003
* Award letter date 22/04/2003
* First payment 28/04/2003

I don’t understand where “overpayment” comes into the equation.

Surely, in the weeks up to the 28th there are:
* arrears of daily rate from 06APRIL to 21APRIL and
* 8 days TC income from 22APRIL to 28APRIL

What am I missing?

[martin walmsley]

Peter,

Are you inputting the NTC award back to the start of the payment cycle (e.g. weekly, or 4-weekly), then making any o/p irrecoverable as DE?

Re case 3 ex 1 – I understand the o/p period to be 7/4/03-27/4/03 due to the 4-week payment cycle. The NTC payment for this period is “payment in arrears” not “of arrears”. The amount of o/p is then made irrecoverable as Departmental Error. It also appears this provision with regard to o/p’s created to payment cycles will continue to be treated in this way (i.e. DE).

[Anonymous]

Martin,

My brain has started the weekend early.

I’ll have a think, a read and so forth on Monday and come back to you.

[martin walmsley]

Same here. Speak again Monday…and (try and!) have a nice weekend.

[Anonymous]

I posted this question on another thread last week but it seems to relate to this thread more. I’m still not entirely clear either on the date claims for HB/CTB should be amended from……

Section 4 of Amendment 8 to “the guide” has some examples of when claims should be amended from and how overpayments should be dealt with. But…

Case 3, example 2, finishes with the statement that “the overpayment will only arise from the first week of the current 4-week period”. Therefore, where a 4 weekly payment is made w/c 28/4/03, the HB/CTB would be amended from 7/4/03. It would, therefore, follow that where a 4 weekly payment is made w/c 26/5/03, the HB/CTB is amended from 5/5/03 with any tax credit award made for the period 7/4/03-4/5/03 being treated as capital.

But….

Case 4 describes a customer who claims NTC 1/5/03, has it backdated to 6/4/03 and is notified of the award on 15/5/03. This example states that the HB/CTB overpayment only arises from the date of award and that arrears are calculated from 6/4/03 to the day before the date of the award.

So which is right? The start of the most recent payment cycle or the Monday following the date of the award letter. Or am I missing something here…?:15:

[Mark]

Great – just as a got my head round all the other Tax Credit rubbish we now have a new overpayment concept – the “structural overpayment”. Anthony is quite right about the manual – the DWP have given us 2 suggestions for when TC income is taken into account – either from the date the award is made (presumably the date of the award letter) or the first day that the first “non-arrears” payment is intended to cover.

I really think that this is all a complete mess. Tax Credit payments are not intended to cover a particular period at all – they are just installments – so any reference to the counting back 6 days (for weekly paid) or 27 days (for 4-weekly paid) claims is quite bizarre anyway.

The manual certainly does seem to say that the Departmental Error category will apply to all overpayments created by the 1st non-arrears installment of a Tax Credit claim. This should be fun (read “mad”) when it comes to CTC and WTC being paid using different payment cycles.

The plain fact is that Tax Credits and HB/CTB just don’t fit together and with all the good will in the world they never will. Until (and if) we get some legislative simplification it is a dead cert that LA’s will continue to come across scenario’s that the DWP haven’t thought of yet – how about HB advance payment cases for starters – and that the regulations offer no help with.

So where does this leave us? I am fed up waiting for amendments to the manual because it seems that they always generate more questions than answers. I bet some LA’s have already decided that the mid-year change cases are best dealt with just using the dates and installment amounts on the award letters – and if so I don’t blame them. It actually makes more sense that way anyhow.

As far as overpayment classification goes even if between us all we reach complete agreement on how to do it how many of you think you can teach the assessors in your LA to do it. I’ll admit right now that I have no chance whatsoever because it is simply too difficult.

Sorry to be having a moan about all this again – I don’t want to defelect this topic from where it was going. I wish you all the very best of luck coming up with the answers. Personally I’m moving on to look at Pension Credits because I’m not going to let the Tax Credit fiasco happen again.

[Anonymous]

Case 3: Example 1 – end paragraph.
Without delivering a lengthy dialogue, we understand the ingredients of an overpayment i.e. HB/CTB in excess of entitlement – brought about by an error – in any case a reactive process.
In this scenario, by allowing a Departmental Error, DWP are effectively providing for an overpayment through the inception of what can best be desribed as a new ‘rule’. In reality, it is a default marker to facilitate for the resultant overpayment.
In other cases ‘income’ is taken over the period for which it was due so why should an exception be made with NTC?

[janish]

I reckon it goes like this:
IR assessor calculates the annual amount due ( or plucks it out of thin air as the case may be), the daily amount(s) and the arrears to date. Award letter shows date of calculation, let’s say 5/5/03. Arrears payment is made 8/5/03, but first 4-weekly payment is not made until 4 weeks down the line, let’s say on 29/5/03. Therefore we count it on the claim from 5/5/03, as it covers weeks comm. 5/12/19 and 26 May. However if IR fail to post the [i:0c9ebb2ded]letter[/i:0c9ebb2ded] until ,say,21/05/03, and we don’t receive it until ,say, 23/05/03, there may very well be an overpayment between 5/5/03 and 25/05/03, which can be classed as Dept. error. ( a structural overpayment )

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