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Tax Credit case summary 7
Mrs G was represented by her local Citizens Advice Bureau (CAB). They complained, on her behalf, that an overpayment of tax credits, paid into an account that she previously held with her ex-partner, had been paid after their separation and after her removal of her name from the account into which it had been paid. Mr and Mrs G were jointly claiming tax credits. They then separated and Mrs G moved out of the marital home with her children. One week later, she notified the TCO about this change and her new address. She opened a new bank account in her own name and she removed her name from the bank account formerly held with her ex-partner. Although the bank removed her name from the account immediately, they did not change the account to a sole account until three weeks later. Although the TCO updated Mr and Mrs G’s tax credit record, to reflect their household breakdown, they mistakenly excluded Mr G’s income from their re-calculation of their joint entitlement up to the date of their separation. This resulted in an incorrect lump sum of tax credits being paid into the nominated bank account formerly held by Mr and Mrs G but now in Mr G’s name only. Award notices, reflecting the changes made, were not sent to Mr and Mrs G until after the end of the tax year, so Mrs G was unaware that the lump sum payment had been made. At the time the payment was made, the bank had not changed the account to a sole account, but her name had been removed from it, so she had no access to this money. As Mrs G received a payment of tax credits, on her new single award, into her new bank account, she believed that the change that she had notified had been processed and that all was in order. She maintained that she had no reason to believe that any other tax credit payment had been made. The law says that where an overpayment is made on a single claim, the person who was awarded tax credits is responsible for repaying that overpayment. Where an overpayment arises on a joint claim, both claimants are jointly and separately responsible for repaying the overpayment. Jointly and separately means that both claimants are legally responsible for repaying the full amount owed. Once it had been established that tax credits had been overpaid on Mr and Mrs G’s joint claim, Debt Management and Banking (DMB), in accordance with the legislative position, applied to both parties for repayment of an overpayment of £4,190.34 tax credits. As Mrs G had no knowledge of the lump sum paid into her former partner’s account shortly after their separation, it came as some surprise to her to be approached subsequently for repayment of the overpaid tax credits. Mrs G’s representatives asked the TCO to reconsider the recovery, taking into account these circumstances. The TCO maintained their stance that, as the account into which the overpayment had been paid was still a joint account at the time of payment, both Mr and Mrs G were responsible for repayment of the excess tax credits paid on their joint account. Mrs G’s representatives complained to us about this.
On the basis of Mrs G’s ignorance of the fact that the overpayment had been made and her inability to access the money, we concluded that it would be unfair to seek recovery of that overpayment. We asked the TCO to make representations to their DMB colleagues that in this case recovery should be sought from Mr G only, as he had had sole knowledge of, and access to, the money. DMB subsequently decided that it was unfair to recover the overpayment from Mrs G and that the overpayment should be recovered from Mr G only. The TCO had offered to pay Mrs G £50 compensation in recognition of the fact that a mistake on their part had led to the overpayment being made. We asked them to increase their offer to reflect that they could have made representation to DMB sooner. The TCO agreed to increase their offer to £130 and they paid Mrs G a further £10 to cover her direct costs.
