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Tax Credit case summary 5
Ms E made a claim for tax credits in April 2003 and stated on her claim that her childcare costs were £15 per week. The TCO made an error when they processed the claim and this resulted in Ms E’s entitlement being calculated on the basis of childcare costs of £780 per week. The TCO sent award notices to Ms E in May 2003 and March 2004 detailing how her award had been calculated. These notices would have made it clear that the award was based on incorrect information about Ms E’s childcare costs. In January 2004, the TCO contacted Ms E’s child’s school in order to verify the childcare costs. The school provided the TCO with the information requested but, unfortunately, the TCO failed to act on this information. This failing was identified as a result of the discussions we had with Ms E during our investigation. Ms E’s 2003/04 award was finalised in September 2004, using the correct childcare costs. This correction to the award meant that Ms E had been overpaid by approx. £4,500. There was also an overpayment in the 2004/05 tax year, as the provisional payments made until September 2004 were also based on the incorrect childcare costs. The TCO had told Ms E that these overpayments were recoverable. They said that, based on the clearly incorrect information about childcare costs on the two award notices, Ms E could not have reasonably believed that her award was correct. In her complaint to this office, Ms E told us that she had not received the two award notices that the TCO had sent. She also said that she had limited knowledge of the tax credits system, did not know what she was entitled to and trusted the TCO to calculate her award correctly. She maintained that she had no reason to think that her payments were wrong.
We partially upheld this complaint. We considered what Ms E had said very carefully. We noted that the notes that accompany tax credit claim forms tell claimants that, once the claim form is processed, the TCO will send an award notice to the claimant, advising them how much tax credits they will get and when payments will start. We felt that, if Ms E had not received an award notice, we would have expected her to contact the TCO to query this. We also felt that it was reasonable to expect that someone making a claim for tax credits will, once that claim has been processed, expect to receive some sort of notification from the TCO confirming what they had been awarded and when they will receive payment. We did not consider that a claimant would need to have a detailed knowledge of how the tax credit system works in order to expect this. Furthermore, we noted that the payments Ms E began to receive were not insignificant and actually amounted to approximately half of her income from employment. We felt that these significant payments had been accepted without question for a period of 16 months, even though Ms E had no information available to her to confirm how they had been calculated or whether they were correct. After considering all of the circumstances of this case, we decided that it was not reasonable for Ms E to believe that her tax credit payments were correct. As the conditions for writing off an overpayment had not been met, we did not recommend that the overpayment be written off. Although we felt that the TCO were correct to say that the overpayment was recoverable, we were critical of them for their handling of Ms E’s claim and complaint. In particular they –
- processed the claim form incorrectly
- failed to act on correct information provided subsequently about the childcare costs
- delayed in telling Ms E and her MP that the overpayment had arisen due to a mistake on their part
- failed to address the point that Ms E had made about not receiving her award notices
- delayed in sending a report to this office about what had happened.
We agreed with the TCO that Ms E should receive £165 in recognition of the above failings.
