tax credit overpayment affect on CTB help please

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    Can anyone help with this? we have a case where the clmt was in receipt of tax credits (HBMS match came through) he didnt declare it to us as he says that he knew the tax credit award was wrong. Inland Rev have now agreed with him that he should not have been receiving it and have asked for the whole year back. We have a CTB op for failiure to declare tax credits but now have an appeal on the grounds that we shouldnt take it into account as he was overpaid tax credits and is paying it back.

    Any thoughts?


    Tax Credits are used as income for the period they are received for. You should always use the amount that is in payment (net amount).
    That means that there would be on overpayment which should be recoverable from your claimant. 8)


    I agree with Jon, your claimant will be liable for the o/p. Tax Credits have to be taken into account as income for the period when they are received. Even if they are being incorrectly paid. There have been a few threads similar to this topic.


    Was having a tidy up the other day and came across CH/1450/2005 which confirms that the tax credits should be taken into account.

    Andy Thurman

    I agree too but …..

    This does seem to be one of those cases where it seems unfair – if, that is, the clmt has genuinely been trying to get IR to change their decision and stop the award, he’s held on to the monies received and paid it all back in full as soon as IR agreed.

    It all works fine if there is an ongoing tax credit award which would then be reduced to recover the overpayment – it would all ‘balance out’ over time. In this case, the clmt is definitely losing out.

    What if a bank error had resulted in regular payments into someone’s account that was then demanded back after the account holder alerted the bank?

    The decision to include the tax credits is definitely the correct one, though.


    The Adelphi seem to recognise this rule is ‘unfair’ where the claimant has no ongoing entitlement to tax credits.

    [quote:86a8500c0a]Unfortunately you cannot quote a regulation in this type of scenario as one does not exist. This is the crux of the matter which is why para 38 says there is no provision etc. The fact is that at the time of the claim the claimant did receive that income and legally you were correct in taking it into account at that time. The fact that this was later found to be incorrectly paid is irrelevant to the claim.

    There will be a few cases where this happens, as the person is no longer entitled to tax credits but in the majority of cases the person will still be entitled to tax credits and a recovery will be made which means that you only take into account the net amount so that it balances out.”

    You could always use your discretion [i:86a8500c0a]not[/i:86a8500c0a] to recover the excess CTB. Alternatively, award him a DHP.

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